Nvidia’s surprise earnings a year ago accelerated excitement about all things AI-related when the company forecast quarterly revenue more than 50% above Wall Street expectations, sending the company’s shares up 24% the next day.
This time around, bets in the options market imply an 8.6% swing in Nvidia’s stock price by Friday, Trade Alert data shows. That would translate into a $200 billion swing in market value — larger than the market value of about 90% of the companies in the S&P 500.
Of course, Nvidia’s soaring stock price means the company has to meet a high bar to support its stock. For example, some investors might want the company to report particularly strong revenue and expect it to remain strong going forward.
“Even though things look very good for Nvidia right now, revenue remains very volatile and I think quite unpredictable,” said Matt Benkendorf, chief investment officer at Vontobel Quality Growth.
Yet despite the surge in shares, Nvidia’s valuation has fallen as analysts have rapidly raised their estimates for the company’s expected profits. The stock recently traded at about 34 times expected earnings over the next 12 months, down from more than 80 times midway through last year, according to LSEG Datastream.
"Unlike some AI-driven companies ... Nvidia's growth is primarily driven by fundamentals," said Deepon Nag, portfolio manager of the large-cap value strategy at ClearBridge Investments. #AI
This time around, bets in the options market imply an 8.6% swing in Nvidia’s stock price by Friday, Trade Alert data shows. That would translate into a $200 billion swing in market value — larger than the market value of about 90% of the companies in the S&P 500.
Of course, Nvidia’s soaring stock price means the company has to meet a high bar to support its stock. For example, some investors might want the company to report particularly strong revenue and expect it to remain strong going forward.
“Even though things look very good for Nvidia right now, revenue remains very volatile and I think quite unpredictable,” said Matt Benkendorf, chief investment officer at Vontobel Quality Growth.
Yet despite the surge in shares, Nvidia’s valuation has fallen as analysts have rapidly raised their estimates for the company’s expected profits. The stock recently traded at about 34 times expected earnings over the next 12 months, down from more than 80 times midway through last year, according to LSEG Datastream.
"Unlike some AI-driven companies ... Nvidia's growth is primarily driven by fundamentals," said Deepon Nag, portfolio manager of the large-cap value strategy at ClearBridge Investments. #AI