Tonight belongs to NVIDIA!

In the pre-market trading of overnight US stocks, Nvidia continued its strong upward trend from the previous trading day, with its stock price reaching a historical high of $481 at one point during the day, surpassing the previous high on July 14th. However, it ultimately fell by nearly 2.8% and closed at $456.7.

In the wave of AI investment sparked by ChatGPT, Nvidia, with its strong computing power as a moat, is currently the biggest winner. Its stock price has risen by over 200% so far this year, making it the seventh US company to surpass a market value of $1 trillion.

On the second day after the announcement of its first-quarter performance, Nvidia shocked the market with a 30% surge in its stock price after hours, pushing its market value close to $1 trillion, and leading the AI sector's continuous rise for months.

Nvidia's second-quarter earnings report will be released tonight (before the US stock market opens on Wednesday). Despite the somewhat intimidating rise in its stock price, investors and Wall Street analysts are still heavily betting that its impressive performance will once again drive Nvidia's stock price up.

Record High in the Number of Call Option Contracts, Hedge Funds Increase Their Bets

According to Cboe data, as of mid-August, Nvidia's option bets have exceeded $100 billion, with call options accounting for about 60% of them. The number of open call option contracts for Nvidia in August has reached a new high.

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

At the same time, hedge funds are also increasing their bets on Nvidia. As of the end of June, their total position in Nvidia reached 1.9%, equivalent to a position of over $20 billion.

Nvidia's most famous investors include hedge fund tycoon David Tepper's Appaloosa Asset Management, Dan Loeb's Third Point, and Soros Fund Management. Therefore, for many investment giants, their success in the future will depend on Nvidia's latest report card.

Wall Street collectively raises Nvidia's target price, analysis: Nvidia's market value may exceed $2 trillion

Due to optimism about Nvidia's second-quarter performance, Wall Street has collectively raised Nvidia's target price ahead of this "most important AI earnings report."

Most Wall Street analysts are optimistic about Nvidia's stock price and performance. According to FactSet data, most of the 50 analysts covering the stock 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 reached $1000.

Rosenblatt analyst Hans Mosesmann set Nvidia's target price at $800, stating in a report last week that Nvidia is "unique in software and artificial intelligence solutions." According to his rating, Nvidia's market value will exceed $2 trillion, making it the world's fourth-largest company after Apple, Microsoft, and Saudi Aramco.

In the past 10 months, Nvidia's total market value has increased by $890 billion, surpassing the combined market value of JPMorgan Chase and Walmart.

As Nvidia's stock price soars, its relative value also rises. Since last autumn, Nvidia's price-earnings ratio has risen from about 50 to nearly 250, compared to a median price-earnings ratio of about 25 for all S&P 500 index component companies.

Will the Q2 performance satisfy the market?

Thanks to the booming demand for GPUs brought by AI, Nvidia's Q1 performance far exceeded market expectations: Q1 revenue was $7.192 billion, higher than the company's guidance range of $6.37 billion to $6.63 billion, a YoY decrease of 13%. Analysts expect a YoY decrease of 21.5% to $6.52 billion.

For the upcoming Q2 earnings report, Nvidia expects revenue to exceed $11 billion, with a YoY growth of "over 50%."

FactSet data shows that analysts expect Nvidia's AI-related sales to double, and the company's profit to increase more than four times YoY.

The market has high expectations for Nvidia's Q2 performance, so any result is likely to cause a huge wave in the capital market.

According to Trade Alert data, Nvidia's stock price volatility will be close to 11% in the next three days. In comparison, the average volatility of the stock in the past eight quarters was 8.6%.