Nvidia's Jedi rebounded and its market capitalization soared by more than $420 billion in 4 days

The chipmaker's stock price surged 6.53% to $116.14 on Tuesday, surging 17% over the past four trading days, increasing its market value by nearly $424 billion. The stock's rebound also boosted US stocks higher, as Nvidia contributed about 22% to the increase in the S&P 500 index over the same period, double that of any other individual stock.

Ivana Delevska, founder and investment director of Spear Invest, said, “Nvidia received a lot of profitable news from hyperscale data centers this earnings season, but the impact of spread trading was too great, so it became irrelevant. Now the technical pressure has abated and we are back to the fundamental narrative, which is why we are seeing this surge.”

Nvidia's rise caught options traders who were betting on the stock's further decline by surprise. According to data compiled by Bloomberg, the stock's protection costs will drop 10% over the next 60 days compared to betting on a 10% increase in contracts, which is close to the highest level since May 2023.

Of course, the stock, which quickly rebounded a quarter of its increase after soaring more than 1000% in 15 months, rebounded 17%, which did not dispel all the concerns that led to the recent sell-off. Investors are still worried about the health of the US economy, and fear that tech companies will spend hundreds of billions of dollars in developing artificial intelligence (AI) over the next few years may yield almost nothing.

However, as of now, this round of sell-off has attracted a large number of undercover buyers. From safe-haven funds to retail investors, they are optimistic about the long-term development trajectory of AI, and they may open positions before Nvidia releases the expected strong financial report at the end of this month. Nvidia's stock price is still about 14% below the peak hit on June 18. On the same day, it surpassed Microsoft to become the world's largest company by market capitalization for a short time.

News Source: World News Network