Nvidia Stock Traders, Brace For Wild Post-Earnings Swings As Shorts Already Top $50B

Investors have shorted 265 million Nvidia shares, according to S3 Partners, which says options activity suggests +/- 4% stock move following the earnings report.

• Nvidia short interest has been climbing since September - Koyfin data.
• Nvidia’s 50-day moving average has remained flat since November, while the MACD and RSI are near neutral, suggesting no strong directional bias - S3 Partners.
• Stocktwits sentiment NVDA continues to remain ‘bearish.’

Nvidia Corp. stock has the highest short exposure in the S&P 500 ahead of the AI chipmaker's fourth-quarter report on Wednesday, according to an analysis by S3 Partners.

The quarterly report from Nvidia, the bellwether of the tech and AI trade, has, in recent years, evolved into a market-moving event capable of swaying broader indices. 

Nvidia Short Status

Currently, investors have shorted 265 million Nvidia shares, worth a notional $50 billion – the highest short exposure in the entire SPX in terms of dollars at risk. 

Short interest has risen in both shares and percentage of the float, while Nvidia stock has remained range-bound, suggesting potential skepticism rather than stress, according to S3 Partners, which tracks short trades in U.S. equities.

According to Koyfin data, short interest has been rising since September and stood at 1.1% of the total float as of the last reading. 

The top 10 shorts in the S&P 500 index sum to $240 billion, or nearly a quarter of the $1.1 trillion in total notional short exposure across all index constituents.

NVDA Stock Muted

Nvidia shares have gained a modest 2.7% year to date, pressured by an intense selloff in technology stocks triggered by fresh fears over AI-related disruption. They are down about 8% from their Nov. 3 peak.

In fact, Nvidia’s forward 12-month price-to-earnings ratio has dropped sharply in recent months – now below peers like Intel and AMD – making shares more attractive on paper; however, retail investors remain on the sidelines.

The options market is currently pricing in an implied 4% one-day post-earnings move on either side, suggesting a potential $2 billion one-day swing for the short side, according to S3 Partners.

The analysis showed that Nvidia’s 50-day moving average has remained flat since November, while the MACD and RSI are near neutral, suggesting no strong directional bias.

MACD, or moving average convergence divergence, is a momentum indicator that shows the relationship between two moving averages to signal trend strength and potential reversals. 

RSI or relative strength index indicates whether a stock is overbought (above 70), oversold (below 30), or neutral (around 50).

Analysts’ Expectation For Nvidia

Analysts expect revenue to rise 67% to $65.7 billion and adjusted profit to rise 71% to $1.53 per share, according to Koyfin. They broadly forecast another blowout quarter, and some emphasise that future business projections would be key.

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