'More skepticism than stress': shorts bet $50 billion against Nvidia ahead of report

On the eve of publication of quarterly reports of Nvidia the sum of bets on reduction of shares of the company turned out to be the largest among the issuers included in the base index S&P 500. According to analysts of S3 Partners, such interest of shorts indicates investors' skepticism rather than stressful situation around the leader of AI-industry.

The amount of short positions on Nvidia shares, according to data as of February 23, two days before the publication of the company's financial report reached $50 billion, which is equivalent to the value of 265 million securities. According to the American financial data provider S3 Partners, this makes the chip maker the absolute leader among S&P 500 participants in terms of the amount of funds put on the fall of its capitalization. For comparison, S3 Partners estimates the total volume of shorts in all issuers in the S&P 500 at $1.1 trillion.

Despite the colossal figures, experts consider "short-squeeze" - a situation when mass closing of short positions provokes a sharp rise in quotations - unlikely. According to their calculations, the share of Nvidia shares in free circulation, involved in shorts, is only about 1%, and liquidity in the market remains sufficient. Nevertheless, the sheer dollar size of short positions will turn even a modest fluctuation in quotes into a serious stress test for investment portfolios, S3 noted.

Shares of the world's most expensive company have been trading in a narrow range since July 2025, and the upcoming report may become a powerful catalyst for volatility. The options market is laying the quotes movement by plus or minus 4% after the data publication. If the forecast comes true, the drop in the value of positions could be as much as $2 billion in a single trading session, S3 warned. The initial reaction of investors is likely to be strengthened by technical factors: rebalancing of portfolios and adjustment of hedging instruments.

On Monday, February 23, Nvidia shares rose by 0.9% despite the general slump in the technology sector, supported by news from South Korean supplier SK Hynix, whose management promised to increase production of scarce memory chips for AI-accelerators. However, this local rise does not cancel the fact that the last six months the value of Nvidia securities almost did not change, emphasizes Barron's. At the premarket on February 24, Nvidia shares are down 0.6%.

Nvidia will report on the results of the fiscal quarter ended in January on February 25. According to the FactSet consensus forecast, the company will report adjusted quarterly earnings of $1.51 per share on revenue of $65.94 billion.

The majority of analysts watching Nvidia's stock are advising them to buy (68 ratings of "Buy" and "Overweight"), MarketWatch data shows; five experts are advising to hold the company's shares ("Hold") and only one is advising to sell.

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