As NVIDIA, a leader in the AI boom on Wall Street, is set to announce its earnings in a day, Fortune predicted on the 19th (local time) that NVIDIA’s stock price will either surge or crash by 11% following the earnings release.
Fortune anticipates extreme volatility in NVIDIA’s stock price, predicting an 11% surge or crash based on the current trend in the options market.
NVIDIA will announce its earnings immediately after the market closes on the 21st
Last quarter’s earnings per share are projected to be $4.60, an increase of over 600% from 65 cents a year ago. Revenue is expected to be $20.5 billion, an increase of about 240% from the previous year.
Stronger-than-expected earnings could fuel stock price momentum and potentially trigger a sharp rise in stock prices by stoking investors’ FOMO (Fear of Missing Out).
However, if the earnings fall short of market expectations, a massive sell-off for profit realization could cause the stock price to plummet.
NVIDIA’s stock has historically experienced substantial movements after the announcement of earnings.
For instance, a 14% price jump followed better-than-expected earnings and revenue last February, and a 24% increase occurred in May when results again outperformed market expectations.
The current climate in the options market, with a mix of call (buy) and put (sell) options, highlights the speculative nature surrounding NVIDIA’s stock. Specifically, the price for an “options straddle” expiring two days post-earnings on February 23 indicates an expected $80 fluctuation.
If NVIDIA closes the market just before expiration at $725 per share. For the options trader to break even, the stock price would need to rise above $805 (an increase of $80) or fall below $645 (a decrease of $80).
Fortune reported that this represents a volatility of 11% in either direction.
sinopark@news1.kr