Key insights
- NVIDIA shares declined due to profit-taking after a recent rally fueled by China news. Options expiry amplified selling pressure as traders unwound positions ahead of earnings. A broad market risk-off tone added to the negative sentiment, overshadowing a price target increase from Bank of America. The pullback is driven by short-term technical factors and profit-taking rather than a fundamental shift.
Investing.com -- Shares of NVIDIA fell 3.68% in morning trading today as investors engaged in broad profit-taking following one of the stock’s most powerful short-term rallies in recent memory. The stock had surged roughly 20% since May 5, including a strong gain the prior session after reports emerged that Washington had authorized a handful of Chinese companies to purchase NVIDIA’s H200 AI processors. With those catalysts now fully absorbed by the market, sellers moved in to capture gains ahead of a pivotal earnings report scheduled for next week.
The sharp run-up in the stock price had pushed many bullish options traders’ call positions deep "in the money," creating elevated leverage heading into options expiry, with $40 billion in options delta trading against just $4 billion in total premium. NVIDIA reports its quarterly results on May 20, and the ten most popular NVDA options by volume all expire today, with the 235-strike call alone accounting for roughly $114 million in premium and nearly $5 billion in delta. This dynamic created intense repositioning pressure, with traders unwinding positions rather than extending exposure into the uncertainty of next week’s print. As one derivatives analyst put it, "How do you reprice China reopening to Nvidia, I think that’s what people are repositioning for right now," said Brent Kochuba, founder at SpotGamma.
The broader market environment offered little support. The NASDAQ Composite fell 1.40%, the S&P 500 dropped 0.99%, and the Dow Jones declined 0.83% during the session, reflecting a risk-off tone across equities. Bank of America analyst Vivek Arya had raised his price target on NVIDIA to $320 from $300 on May 13, maintaining a Buy rating, providing a constructive backdrop — but even that bullish signal was unable to offset the weight of profit-taking and expiry-driven selling on a day when the entire market was under pressure.
Ultimately, today’s pullback reflects a confluence of forces: a stock that had run hard and fast into a cluster of positive catalysts, an options market creating natural selling pressure on expiry day, and a weak macro tape amplifying the move. Earnings for NVIDIA are always a major event for the broader stock market, and this cycle is particularly consequential given the renewed hopes around a potential U.S.-China trade arrangement that could open the door to expanded chip sales. With the Q1 FY2027 results due May 20, the near-term direction of the stock is likely to hinge on whether management’s guidance can justify the stock’s elevated valuation near its 52-week high.
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