Betting Big on NVIDIA! Over $100 billion in options, 60% bullish, and record high "short-term contracts" betting on stock price volatility.

Regardless of whether the companies rushing to enter the AI market can succeed, NVIDIA has already grasped the concept of the "shovel seller" in the Fourth Industrial Revolution. Even after a three-fold increase so far this year, American investors still believe that NVIDIA can continue to rise!

Optimism from options investors and Wall Street analysts

After the US stock market closed on Wednesday, NVIDIA, the biggest winner in the AI hype, is about to release its earnings report. Despite the turbulence in the US bond market, options trading on NVIDIA has heated up. Cboe data shows that as of mid-August, options bets on NVIDIA have exceeded $100 billion, with approximately 60% of the options being bullish. The number of open bullish options contracts on NVIDIA in August has reached a new high.

In addition, data from Nomura Securities shows that short-term options expiring in a few days are the most popular trading instruments, indicating that many options investors hope to make a quick profit from NVIDIA's earnings report. NVIDIA is reminiscent of the Tesla options frenzy of the past, and related options have become one of the largest casinos in the financial market.

Most Wall Street analysts hold an optimistic view of NVIDIA's stock price and performance. According to FactSet data, out of the 50 analysts covering the stock, the majority are bullish, with an average target price of around $537, which is 18% higher than Tuesday's closing price of $456.68. The highest target price even reaches $1000.

In May, when NVIDIA released its previous earnings report, due to the strong demand for GPUs brought by AI, the performance guidance far exceeded expectations, and its stock price soared by 24% in a single day, with a market value increase of $184 billion.

Therefore, the release of NVIDIA's earnings report this time has become the focus of attention for everyone, and investors are rushing to place their bets out of FOMO sentiment. According to Trade Alert data, the stock price of NVIDIA is expected to have a volatility of nearly 11% in the next three days. In comparison, the average volatility of the stock in the past eight quarters was 8.6%.

This means that regardless of whether it goes up or down, the stock price of NVIDIA after the release of this earnings report will experience more intense fluctuations than before.

How important is NVIDIA's earnings report? It may determine the future trend of tech stocks and the overall market!

According to an analysis by BNP Paribas of 20 AI concept stocks, including NVIDIA, if these 20 stocks were not included, the year-to-date gain of the S&P 500 index would decrease by 13%, almost wiping out the gains of the S&P this year. This shows the influence of the AI frenzy on the overall market. Considering NVIDIA's core position as the leader in AI, this earnings report is of great importance not only to other tech stocks but also to the entire US stock market. In an interview with Reuters, Anthony Saglimbene, Chief Market Strategist at Ameriprise Financial, stated:

"The market is currently focused on two major themes: 1) Can big tech companies continue to lead the market? 2) Is the story of artificial intelligence real?"

NVIDIA's earnings report will reveal the answers to these two questions.

Currently, NVIDIA's weight in the S&P 500 and Nasdaq 100 is 3.2% and 4.3% respectively, which means that its stock price fluctuations have a significant impact on the indices. According to data from S&P Dow Jones Indices, as of July, NVIDIA alone has driven a more than 10% increase in the S&P 500 index.

Furthermore, NVIDIA's performance is a key sentiment indicator for the US stock market and will influence the movement of other tech stocks. Due to the recent surge in US bond yields, which has reduced the attractiveness of risk assets, the S&P 500 has fallen by over 4% this month. The market turbulence has increased the focus on NVIDIA's Q2 earnings report, and many investors are hoping for positive news from NVIDIA to boost market sentiment and revive the recent declining trend in the US stock market.

However, there are also opinions that NVIDIA has already risen too much, with a trailing PE ratio reaching an exaggerated 237 times, and its further upside momentum is limited. Moreover, the market has high expectations for NVIDIA, and if it fails to meet those expectations, combined with the turmoil in the US bond market and hawkish expectations for the global central bank annual meeting on Friday, it could trigger panic selling across the market.

Chuck Carlson, CEO of Horizon Investment Services, expressed his opinion to The Wall Street Journal:

"My guess is that the data will be good, but is that enough? If it's not enough, you may see the selling pressure continue for the past month."