Wall Street traders are preparing for one of the biggest earnings reactions in stock market history as investors brace for a potential $355 billion swing in the value of Nvidia after its quarterly earnings report.
The chip giant is scheduled to release first-quarter results on Wednesday. Options market data shows traders expect Nvidia shares to move about 6.5% in either direction when markets reopen Thursday. Given the company’s enormous size, that translates into roughly $350 billion in market capitalization gained or lost in a single trading session.
That figure is larger than the total market value of nearly 90% of companies in the S&P 500.
Despite the massive projected move, current expectations are actually calmer than Nvidia’s historical post-earnings volatility. Data from Option Research & Technology Services, known as ORATS, shows the company has averaged price swings of 7.6% after earnings in previous quarters. Before Nvidia’s February earnings report, traders expected a 5.6% move.
The shift suggests investors are becoming more comfortable with Nvidia’s dominance in the artificial intelligence market, even as concerns continue to grow over whether the AI spending boom can last.
“I think investors have become complacent about AI/capex,” said Matt Amberson.
Bullish sentiment is still spreading through the options market. One large trade placed Monday involved a 25,000-call spread expiring June 1. The position, priced at $1.78 per contract, bets Nvidia shares could climb nearly 16% to $260 within two weeks.
According to Susquehanna derivatives strategist Chris Murphy, the trade could return more than seven times the original investment if Nvidia rallies sharply after earnings.
Murphy said demand has increasingly shifted toward bullish options contracts instead of defensive hedges.
“The market is no longer simply paying up for downside protection. It is increasingly paying for upside participation,” Murphy said.
He added that bullish bets on technology stocks jumped from a five-year low in March to a five-year high by mid-May.
Even with the growing optimism around Nvidia and AI-linked stocks, investors across the semiconductor sector are also becoming more cautious. Traders have started adding hedges and locking in profits after the industry’s rapid rally over the past year.
That balancing act reflects the pressure now facing Nvidia. Expectations are extremely high. Investors are no longer looking for strong results alone. They want evidence that the AI boom still has room to grow.
Nvidia shares have climbed 19% so far this year. By comparison, the S&P 500 has gained 8%, while the Philadelphia SE Semiconductor Index has surged 57%.
Analysts say investors will focus closely on several key areas in Nvidia’s report, including demand from data centers, spending by major cloud computing companies, profit margins, and future guidance. Those metrics are viewed as critical indicators for the broader AI economy and the sustainability of the ongoing semiconductor rally.
Murphy warned that semiconductor stocks have become one of the market’s most crowded trades.
“The other thing to keep in mind is that semi(conductors) have become a crowded leadership area. The options market is saying they are still willing to chase upside in Nvidia, but they are also starting to hedge or monetize gains in other crowded winners.”
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