Shares of Nvidia Corp. (NASDAQ: NVDA) dropped to a three-week low on Thursday, as investor worries about the company’s growth outlook intensified. The AI-driven chipmaker, which has been at the center of the artificial intelligence (AI) spending boom, is now facing increased volatility, fueled by a major bearish options trade suggesting a deeper decline may be on the horizon.
Massive Bearish Bet Targets 12% Drop in Nvidia Stock
Between 2 p.m. and 2:40 p.m. on Thursday, an unidentified trader made a massive put option bet, purchasing over 300,000 contracts predicting that Nvidia’s shares will drop to $115 by March 7.
📉 This implies a potential 12% decline from Wednesday’s closing price.
📉 The last time NVDA traded at this level was in mid-September 2023.
📉 It was the most actively traded options contract on U.S. exchanges Thursday.
Market Impact: Nvidia Sees Worst Trading Session in a Month
The timing of this bearish wager coincided with increased selling pressure on Nvidia’s stock:
📉 Nvidia’s stock fell nearly 3% following the massive options trade.
📈 Implied volatility on the option surged by 8 points, signaling heightened uncertainty.
📉 Put volume on Nvidia shares doubled its 20-day average, reflecting increased downside protection activity.
A second wave of trading occurred in the last 30 minutes of Thursday’s session, adding another 100,000 put contracts to the volume. Analysts at Susquehanna International Group suggest this could indicate profit-taking by the original buyer, who may have already seen a return on the initial put option purchase.
Why Are Investors Turning Bearish on Nvidia?
The bearish bets against Nvidia come on the heels of its latest earnings report, which, while strong, failed to deliver the kind of “blowout results” that investors have grown accustomed to.
📌 Concerns over AI spending sustainability – While Nvidia has benefited immensely from the AI-driven demand for chips, some analysts worry that the AI boom could slow down, affecting long-term revenue growth.
📌 State of the Union and Jobs Data – The trader’s put option position captures key upcoming macroeconomic events, including President Trump’s State of the Union speech and monthly U.S. jobs data (NFP), both of which could impact market sentiment and tech sector performance.
📌 Profit-Taking After a Historic Rally – Nvidia’s stock has been on an explosive run over the past year, making it a prime target for short-term traders looking to capitalize on short-term pullbacks.
What’s Next for Nvidia Stock?
As Nvidia navigates AI market uncertainties, investors will be watching several key factors:
🔍 AI Demand Trends – Will enterprise and cloud companies continue ramping up AI chip spending, or will we see a slowdown?
🔍 Macroeconomic Events – The State of the Union address and NFP jobs data could affect market sentiment and trigger further volatility.
🔍 Options Market Activity – Elevated put volumes suggest continued hedging and bearish positioning. If more traders follow this pattern, Nvidia could face further selling pressure.
: Is Nvidia Headed for a Deeper Pullback?
While Nvidia remains a dominant force in AI-driven chip manufacturing, the stock is now facing increased skepticism from traders betting on a short-term pullback.
With high volatility, massive put option activity, and macroeconomic uncertainties on the horizon, Nvidia’s stock could see further downside pressure in the coming weeks. However, long-term investors may see any significant dip as a buying opportunity, given Nvidia’s strong fundamentals and AI leadership.
For now, all eyes are on whether the $115 price target in the put options trade becomes a reality—or if Nvidia can rebound from this wave of bearish sentiment.
