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Nvidia Faces $300 Billion Market Value Swing After Earnings Report

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Options Market Braces for Major Post-Earnings Movement

Nvidia (NVDA.O) is primed for a significant market value shift after its earnings report on Wednesday, with options traders anticipating an $8.5% swing in the company’s stock price in either direction. This would translate to a potential $292 billion change in Nvidia’s market capitalization, which currently stands at $3.44 trillion, according to U.S. options market data from ORATS (Options Analytics Service).

The expected swing, based on implied volatility, is consistent with the company’s recent earnings reports, but due to its increased market cap, it is poised to be one of the largest post-earnings price movements ever. A change of this magnitude would exceed the market capitalization of about 95% of S&P 500 companies.

Historical Trend: Positive Post-Earnings Momentum

Historically, Nvidia’s post-earnings moves have generally been smaller than what options traders had anticipated. However, when larger-than-expected moves have occurred, they have almost always been to the upside. Out of the last 12 earnings reports, five saw moves beyond expectations, all of which saw the stock rise, according to ORATS founder Matt Amberson.

Market Focus on AI Growth

Nvidia is at the forefront of the generative artificial intelligence (AI) boom, and the company’s earnings report could have broader implications for the AI sector. The results are seen as pivotal for determining the future direction of the market, especially after a recent slowdown in the post-U.S. election rally.

As Nvidia is closely tied to the AI trade, its guidance and performance could signal the health of the broader technology sector, which has been a key driver of market performance this year. Nancy Tengler, CEO of Laffer Tengler Investments, emphasized that the market will likely extrapolate Nvidia’s results to the entire AI sector.

Key Earnings Expectations and Challenges

For the third quarter, analysts expect Nvidia’s sales to surge 82.8% to $33.13 billion, bolstered by strong demand for AI chips. Despite this optimistic forecast, the company faces supply chain challenges and a potential slowdown in growth, which could affect investor sentiment. Nvidia has outpaced revenue expectations in the last eight quarters, but with a more tempered growth outlook, its ability to navigate these hurdles will be key to its stock performance.

As of Monday, Nvidia shares closed at $140.15, down 1.3%, but still up around 180% year-to-date, making it one of the top performers in the S&P 500 index.

SoftBank to Receive Nvidia’s Latest Blackwell Chips for AI Supercomputer

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SoftBank’s telecommunications unit in Japan will be the first to acquire Nvidia’s latest Blackwell-designed chips, marking a key step in the company’s ambition to harness artificial intelligence capabilities. The California-based chip giant made the announcement at a recent AI event in Tokyo, featuring both SoftBank Group CEO Masayoshi Son and Nvidia CEO Jensen Huang. SoftBank also plans to incorporate the Blackwell architecture in its upcoming supercomputer, as Son strengthens his group’s investment in AI through strategic acquisitions, including a stake in OpenAI and the purchase of chip startup Graphcore.

During a lively “fireside chat,” Huang recalled an instance when Son, already a visionary in AI, once proposed lending him the funds to buy Nvidia, a company the market undervalued at the time. “He wanted to lend me money to buy Nvidia—all of it. Now I regret not taking it,” Huang said, smiling. Son had made the offer shortly after acquiring Arm, a chip designer he later attempted to sell to Nvidia, though regulatory issues prevented the merger.

Over the years, Nvidia has transitioned from a primary focus on gaming graphics chips to becoming the global leader in AI chip technology, now powering much of the AI revolution. While Son has earned recognition as an early-stage investor in tech, with notable stakes in Alibaba and other successes, he has also faced setbacks, such as his high-profile investment in WeWork.

With telecom firms worldwide exploring new growth avenues, SoftBank and Nvidia are collaborating on a network to support both AI and 5G services, aligning their visions for the future. “It’s the same vision that we can smell, right? It’s like a wolf smell wolf,” Son joked about their shared outlook. Huang responded with humor, “I have two puppies. I don’t like that mental image,” drawing laughter from the audience.

 

Super Micro Shares Drop 22% After Financial Report Raises Investor Doubts

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Super Micro shares fell sharply by 22% on Wednesday, hitting their lowest level since May of last year after releasing an underwhelming financial update. The company, a prominent server manufacturer, has been struggling with internal and regulatory challenges, causing its stock price to drop to $21.55—down by 82% from its peak in March, effectively erasing approximately $57 billion from its market capitalization.

The decline in share value follows the resignation of Super Micro’s auditor, Ernst & Young, making it the second auditing firm to part ways with the company within two years. Super Micro has not submitted audited financial statements since May and faces the threat of being delisted from Nasdaq if it does not file its annual results with the SEC by mid-November. Despite issuing preliminary quarterly financial results, the company failed to offer a timeline for when it might file its annual financials.

During a recent call with analysts, CEO Charles Liang confirmed the search for a new auditor but declined to discuss Ernst & Young’s resignation or governance issues. Liang did, however, emphasize Super Micro’s commitment to resolving its overdue financial reporting. Analysts at Mizuho suspended their coverage of Super Micro due to the lack of comprehensive financial data, while Wedbush analysts noted that the latest update from Super Micro left “more questions than answers.”

For the quarter ending on September 30, Super Micro reported net sales between $5.9 billion and $6 billion, missing analysts’ expectations of $6.45 billion but marking a year-over-year increase of 181%. The company’s business has experienced significant growth due to demand for servers equipped with Nvidia’s processors designed for artificial intelligence applications. Nevertheless, analysts expressed concern about the December quarter’s forecast, which fell below estimates with anticipated revenue between $5.5 billion and $6.1 billion—lower than the projected $6.86 billion—and earnings per share of 56 to 65 cents, below the expected 83 cents.

Amid these financial challenges, Super Micro’s stock had previously soared due to high demand for its AI-driven servers, specifically those utilizing Nvidia’s latest GPU, Blackwell. CEO Liang indicated that Super Micro is ready to deliver Blackwell-based servers, but Nvidia’s limited chip supply has impacted shipments. CFO David Weigand reassured investors that Super Micro maintains a robust relationship with Nvidia, which has confirmed no changes in its GPU allocations to the company.

Additionally, Super Micro’s board has appointed a special committee to investigate Ernst & Young’s concerns regarding the company’s financial practices. Following a three-month review, the committee reported no evidence of fraud or misconduct but recommended several improvements in internal governance. Super Micro affirmed its commitment to implementing these recommendations and taking all necessary actions to maintain its Nasdaq listing.