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Nvidia shares could see a $298 billion increase after their second-quarter earnings report.
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Goldman Sachs notes that options pricing data indicates a potential 9% move in Nvidia’s stock in either direction.
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“The bar for Nvidia is a lot lower this earnings season than in recent quarters,” Goldman said.
Nvidia shares could see a massive market value change of $298 billion next it reports its second quarter earnings results Wednesday.
That estimate is based on recent options pricing data, according to a Monday note from Goldman Sachs’ trading desk.
The potential swing in market value in either direction would amount to a more than 9% move in the $3.17 trillion chipmaker’s stock price.
Nvidia holds the record for the largest market value fluctuation in one day to $330 billion, That occurred in late July as stocks recovered from a painful week-long decline.
If the company can report a solid quarter of growth with even stronger prospects, according to the bank, it could surprise the stock market and lead to a big move.
“Can you imagine NVDA exceeding expectations on Wednesday?” asked Goldman Sachs’ trading desk, led by director Scott Rubner.
“Infotech saw net sales for the fourth week in a row (13 out of the past 16) and saw its largest net sales in two months as the sector posted net sales in every region, driven by both long and short sales .The leading book now is Underweight Info Tech versus the MSCI World Index at -9.7% – at an all-time low,” Rubner explains.
In other words, the stock market’s positioning suggests that most investors could be caught off guard if Nvidia rises after Wednesday’s earnings results.
“The bar for Nvidia is a lot lower this earnings season than in recent quarters, given the fundamental selling in technology,” Rubner said.
Nvidia is currently the the second largest company in the S&P500, weighing around 6.5%, meaning the results could have a major impact on the wider market.
Interactive Brokers strategist Steve Sosnick even emphasized how integral Nvidia is to the rest of the market.
In a note on Tuesday, Sosnick analyzed the 25 most active trades on the Interactive Brokers platform, and more than 70% of them have a connection to Nvidia.
First place belongs to Nvidia, followed by Tesla, an important customer of the chip company. AMD, Nvidia’s closest competitor, is number three, and number four is a semiconductor ETF.
According to Sosnick, of the 25 most active trades at Interactive Brokers, Nvidia is connected to a total of 18 names.
“We’ve become quite accustomed to NVDA being at the top of the leaderboard most weeks, reinforcing its key role in investor psychology. Looking further, it’s quite clear that the company plays a crucial role in a host of other popular investment instruments.” Sosnick said.
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