Nvidia has gained $350bn in market value in wildly volatile trading since it reported first-quarter earnings just over a week ago, driven in part by a feedback loop of trading in the chipmaker’s huge options market.
The company was valued at $2.69tn by Friday’s close, more than JPMorgan, Berkshire Hathaway and Meta combined, despite a pullback at the end of the week. It has added roughly $350bn since May 23, when it announced surging revenue growth over the first three months of the year. At the peak earlier in the week its value had risen by nearly half a trillion dollars, growing by a sum close to the market capitalisation of Tesla in just a few days.
Although many investors have been drawn to Nvidia by its bumper earnings, analysts say the past week’s rally bears the hallmarks of a so-called “gamma squeeze”. In such a market phenomenon, bulk buying of call options — derivatives that give traders the right to buy at a preset price and which can pay off it a stock rises — forces brokers on the other side of the trade to buy shares in the underlying stock to protect themselves.