Market Insights

Nvidia releases earnings today, and it could impact other stocks in the AI space.

While per-share earnings are expected to increase about 8 percent from the previous quarter, attention could focus on demand trends. Some investors have worried that the planned launch of faster Blackwell chips later this year will reduce orders for existing products. However firms including Baird, Barclays and Stifel downplayed those fears this week and raised their price targets on NVDA.

This afternoon’s report could be a big event for semiconductor stocks, which are up 34 percent so far this year. (They’re the top-performing major industry group, according to TradeStation data.) NVDA has driven much of the trend, with a 93 percent gain since December. That makes it the No. 3 stock in the S&P 500.

NVDA is above its 8- and 21-day exponential moving averages. It also ended Tuesday at a new record closing high of $953.86, but remains below the March 18 intraday peak of $974. That kind of price action may reflect bullish sentiment.

AMD, Super Micro

The rapid growth in AI has lifted other stocks over the past year. Advanced Micro Devices (AMD) also supplies processing chips, while Super Micro Devices (SMCI) makes servers using NVDA processors. Micron Technology (MU) was neglected early in the boom but broke out in March as AI applications boosted demand for its high bandwidth memory chips.

Given the importance of NVDA in the AI space, these stocks could also be potentially active following this afternoon’s earnings report.

AI Options

TradeStation data shows NVDA’s implied volatility rising from about 46 percent to 66 percent in the last two weeks. That means its calls and puts have gotten more expensive, which may increase the risk of buying options before a major event. (Notice how implied volatility climbs on both charts before earnings and drops afterwards.)

MU’s implied volatility, on the other hand, has been stable. Traders considering potential strategies on the smaller company might buy a call near the money and sell another at a higher strike. That strategy, known as a vertical spread, can leverage sharp moves at limited cost.

This is a potential example to watch, using short-term contracts expiring this week:

• The 24-May 128 calls could be purchased for $2.36.
• The 24-May 133 calls could be sold for $0.74.
• That translates into a cost of about $1.62, excluding commissions.
• The position could expand to $5 if MU closes at $133 or higher this Friday.
• That’s a potential profit of 209 percent from the stock rising 4 percent.
• It expires worthless if MU stays under $128. Breakeven would be at 134.62.

Options trading is not suitable for all investors. Your TradeStation Securities’ account application to trade options will be considered and approved or disapproved based on all relevant factors, including your trading experience. See www.TradeStation.com/DisclosureOptions. Visit www.TradeStation.com/Pricing for full details on the costs and fees associated with options.

Margin trading involves risks, and it is important that you fully understand those risks before trading on margin. The Margin Disclosure Statement outlines many of those risks, including that you can lose more funds than you deposit in your margin account; your brokerage firm can force the sale of securities in your account; your brokerage firm can sell your securities without contacting you; and you are not entitled to an extension of time on a margin call. Review the Margin Disclosure Statement at www.TradeStation.com/DisclosureMargin.

ID 3597028