Nvidia is approaching an unprecedented limit of $6 trillion, when will it be ready?

Nvidia continues to break records on Wall Street. The US chip giant is now worth nearly $6 trillion, and traders think that historic frontier is coming into view sooner than many investors might expect.

The options market indicates that Nvidia may reach the milestone this month. At the same time, the same market shows that investors take into account strong price movements in both directions.

Nvidia (NVDA) shares continue to benefit from the optimism around artificial intelligence. The stock rose 1.3 percent on Friday, while the Nasdaq 100 closed the trading week at a record level.

This ended a period of about seven weeks in which the share moved largely sideways. Nvidia now has a market value of just under $5.7 trillion.

Meanwhile, the size of the company is hard to overestimate. Nvidia accounts for approximately thirteen percent of the Nasdaq and eight percent of the S&P 500. As a result, price movements of the chip company can have a significant impact on the most important US equity indices.

The recent increase followed a meeting between President Donald Trump and directors of companies that play an important role in what Trump describes as “super intelligence”.

Attention is now shifting to the next big milestone. Based on the current amount of outstanding shares, the Nvidia price would have to rise to about $248 to reach a market value of $6 trillion.

Traders in the options market explicitly anticipate a further increase. Based on the so-called delta of Nvidia options, the probability that the company will reach a market value of $6 trillion by the end of October is estimated at about fifty percent.

In the short term, that chance is much lower. For this week, the probability is about thirteen percent. If traders look further ahead, the chance increases quickly. According to the options market, it is around 67 percent before 18 December.

There is even speculation about a much bigger jump. The options suggest a roughly one in sixteen chance that Nvidia will reach a market value of $7 trillion by November 20.

These expectations do not mean that traders are convinced that the stock can only continue to rise. The bandwidths derived from options work in both directions. A price movement of the same magnitude downwards is therefore also considered possible on the basis of that calculation.

Yet there is a striking signal. According to data from Barchart, the expected volatility in call options is higher than in comparable put options. This phenomenon is also called "call skew". It may indicate that traders are paying a relatively high amount to prepare for a further price increase.

Nvidia's own strategy also plays a role in investor confidence. Ben Emons of Highline Asset Management points out, among other things, the company's share repurchase program.

“Nvidia's buyback announcement was a bright spot,” says Emons. According to him, this involves more than just returning money to shareholders.

"The buyback is not just a payout but a capital-allocation event that asserts confidence in long-run AI demand."

Emons thus sees the procurement programme as a signal that Nvidia itself maintains confidence in the demand for artificial intelligence in the longer term.

For the time being, the $6 trillion mark remains the next big benchmark. With a market value of almost $5.7 trillion, Nvidia only needs to increase by a few percent. The options market considers the likelihood of this happening before the end of October to be significant.