Nvidia slips from record as Wall Street awaits key results
- The stock has surged 212 per cent this year, making it by far the biggest gainer among constituents of the S&P 500 Index
- Analysts raised their price targets and expressed optimism that Nvidia’s results will show massive demand for chips used to process AI services
Nvidia shares fell on Tuesday, erasing an initial gain that took the chip maker to an intraday record a day before its highly anticipated earnings report.
Shares opened higher and climbed as much as 2.6 per cent to hit an all-time intraday high of US$481.87, the latest sign of investor optimism ahead of the results. However, they turned lower and ended the session down 2.8 per cent. The Nasdaq 100 Index fell 0.2 per cent.
Still, the stock remains 12 per cent higher from a low hit earlier this month, and has surged 212 per cent this year, making it by far the biggest gainer among constituents of the S&P 500 Index. The Philadelphia Stock Exchange Semiconductor Index is up 39 per cent in 2023.
In a sign of how significant Wednesday’s report will be, the options market is bracing for a move of 9.8 per cent following the results. With Nvidia accounting for nearly 3.1 per cent of the S&P 500, the stock’s move will have broader implications.
Of the 10 largest companies in the S&P 500, Nvidia is the only stock for which the price of call options – which are desirable if the stock goes up – is higher than put options, according to data from Nations Indexes.
“It tells me that people are still scrambling to buy calls in Nvidia,” said Scott Nations, president of Nations Indexes. “They still want upside much more than they’re worried about downside protection. That is an outlier in the biggest names in the S&P.”
The stock’s 2023 rally reflects optimism over artificial intelligence (AI), which Nvidia is a key player in, and the Tuesday record is the latest example of how investors have been piling into the stock ahead of second-quarter results due after the market closes on Wednesday.