Lull before Nvidia: why the market expects minimal volatility from the chipmaker's shares

Options traders are surprisingly calm ahead of a report from the world's most expensive company, chipmaker leader Nvidia, Reuters writes .

The day after the company releases its quarterly results - Feb. 26 - options on Nvidia's stock suggest its shares will fluctuate about 5.6% in either direction. According to data from analyst firm Option Research & Technology Services (ORATS), this is the lowest volatility forecast for Nvidia's stock after the reports in the last three years.

In money terms, a 5.6% swing in Nvidia's stock would mean a jump in the company's capitalization of about $260 billion, an amount that exceeds the value of nearly 90% of the companies in the S&P 500 index, Reuters specifies. However, on a percentage basis, this is far less than the 7.6% average that the market has been laying out ahead of other Nvidia reports over the past 12 quarters. In addition, the current forecast, which assumes a 5.6% move in the stock after the company's results release, is noticeably lower than the actual average fluctuation of Nvidia securities after reports over the past three years (it was 7.4%), Reuters points out.

The report itself, Bloomberg notes, will coincide with a critical time for the U.S. stock market - investors are increasingly nervous about the prospects for AI. While most Wall Street analysts expect strong results from Nvidia amid huge bigtech spending on AI infrastructure, there is no certainty about how stocks will react.

Now the market is dominated by fears: whether the huge investments in AI will be justified and whether this technology will not destroy the usual business models, Bloomberg specifies .

Options traders' tempered expectations of Nvidia's stock volatility after the report may be due to the fact that the company's securities have not shown sharp jumps in recent quarters. ORATS data shows that in only one of the last five quarters have quotes changed by more than 5%, Reuters adds.

"In a market where individual stock volatility is elevated relative to index volatility, this unusually low valuation [by traders] makes Nvidia one of the most interesting catalysts of the week," said Chris Murphy, co-head of derivatives strategy at Susquehanna, a market maker in Nvidia securities.

Nvidia simply stopped moving the way it used to after the reports, Murphy added. "With more than 80 analysts covering the company and every major fund closely monitoring AI capital expenditure trends, positions and valuations have become much more calibrated than they were during the explosive phase of 2023, when +14% and +24% earnings reactions were commonplace," he explained.

"The feeling is that however good the report and forecasts are, it's likely already priced into the price [of Nvidia securities]. We're going to see a muted reaction, as we've seen for much of the reporting season, where option sellers are likely to be in the driver's seat, collecting a premium from speculators betting on a super-powered move," said Ken Ma, CEO of Mahoney Asset Management.

After soaring in previous years, Nvidia's stock has gained 5.5% since the start of 2026, while it has pulled back about 6% since hitting a record high in late October last year. Investors are confused by the hundreds of billions of dollars that giants like Alphabet and Microsoft are spending on AI. At the same time, investors are withdrawing capital from sectors that could be directly threatened by AI, Bloomberg explains.

On the eve of the publication of reports on February 23, the amount of bets on the decline in shares of Nvidia turned out to be the largest among issuers included in the underlying index S & P 500. It reached $50 billion, S3 Partners calculated. For comparison: the total volume of shorts in all issuers in the S&P 500 at that time, according to researchers' estimates, amounted to $1.1 trillion.

During trading on February 25, securities Nvidia added 1.9%. Most analysts watching the company's shares advise them to buy (68 ratings "Buy" and "Overweight"), according to MarketWatch data; five analysts advise to hold Nvidia securities ("Hold") and only one - to sell.

Wall Street analysts expect Nvidia's revenue to jump 68% to $65.9 billion in the fiscal fourth quarter ended Jan. 31, and adjusted earnings to rise 72% to $1.53 per share, Bloomberg writes.

Investors will pay special attention to the company's gross margin, a key performance indicator that could reach 75%, becoming the highest in more than a year. The market is waiting for confirmation that Nvidia will be able to maintain such high profitability, despite the rising cost of components and memory chips.

Analysts are also waiting for news about the company's new chips - Blackwell and Rubin. Nvidia CEO Jensen Huang said last October that these lines would bring the company $500 billion in revenue over the next few quarters.

Nvidia's cooperation with China is also in the spotlight. Investors are interested in the possibility of selling Nvidia chips in China after the administration of US President Donald Trump authorized the company to supply H200 chips to Chinese partners.

This article was AI-translated and verified by a human editor