• Nvidia's upcoming earnings report could trigger a historic $300B market swing.
• The company's shares have surged by approximately 150% year-to-date, significantly impacting the S&P 500.
• Options pricing suggests traders anticipate a large upside move from Nvidia.
• The earnings report's outcome could significantly impact the health of the tech sector and the overall market.

As a dominant player in the artificial intelligence (AI) chipmaking industry, Nvidia is set to release an earnings report that is expected to cause a significant swing in its share price. Options pricing indicates an anticipated move of around 9.8%, a figure larger than any move predicted ahead of Nvidia's earnings reports over the past three years and well above the stock's average post-earnings move of 8.1% over the same period, according to data from analytics firm ORATS.

Given Nvidia's market capitalization of about $3.11 trillion, a 9.8% swing in the shares would translate to about $305 billion. This would likely be the largest expected earnings move for any company in history, according to analysts. Such a move would overshadow the market capitalization of 95% of S&P 500 constituents, including Netflix and Merck (MRK.N), as per LSEG data.

Nvidia's performance has significant implications for the broader market. The company's shares have surged by approximately 150% year-to-date, accounting for around a quarter of the S&P 500's 18% year-to-date gain. It alone has been a huge contributor to the overall profitability of the S&P 500, said Steve Sosnick, chief strategist at Interactive Brokers. It's the Atlas holding up the market.

Options Pricing and Market Sentiment

Options pricing suggests traders are more concerned about missing out on a large upside move from Nvidia than getting hurt by a large drop. Traders are assigning a 7% chance the stock rises more than 20% by Friday, while only giving a 4% probability to a more than 20% sell-off, according to a Susquehanna Financial analysis of options data.

The reason options traders are pricing this large a move for Nvidia has to do with how volatile the company's shares have been in the past. Nvidia's average 30-day historical volatility this year - a measure of how much the stock has gyrated over a rolling 30-day period - is about twice the average of the same measure for all other companies with market caps higher than $1 trillion, according to a Reuters analysis of Trade Alert data.

The options are just reflecting how the stock is actually moving, said Christopher Jacobson, a strategist at Susquehanna Financial Group, which makes markets in the securities of Nvidia. (It's) is just a function of continued uncertainty/optimism with regards to AI and the ultimate size of the opportunity coupled with NVDA having become such a widely followed stock among institutional and retail, he said.

Historical Performance and Market Impact

Historically, Nvidia's earnings reports have been closely watched events that have led to significant movements in the company's share price. The company's position as a leading player in the AI and semiconductor industries means that its performance can have a significant impact on investor sentiment and the broader market. A positive earnings report can potentially spark a rally in the market, while any disappointment could lead to a sell-off.

Since Nvidia is still flirting with its all-time high, investing now may have limited upside in the short term. However, for those with a long investing timeline, gold exposure can be a smart diversification move. Nvidia's upcoming earnings report is expected to cause a significant swing in its share price, reflecting the company's importance in the AI chipmaking industry and the high expectations for its performance.

The anticipation surrounding Nvidia's earnings report underscores the importance of the company's performance as an indicator of the health of the tech sector and potentially the overall market. The company's historical pattern of significant share price movements following earnings reports, coupled with its dominant position in the AI chipmaking industry, contributes to the current market sentiment and the high volatility in Nvidia's shares.

The market is eagerly awaiting the earnings report, which could potentially trigger a historic $300 billion swing in the company's market value.