Summary:
⚈Pre-market decline suggests a potential correction amid rising bearish bets
⚈ Upcoming AMD earnings may validate or challenge Nvidia’s recent rally
Following Nvidia (NASDAQ: NVDA) stock’s strong rally in the early days of May, short sellers have taken to growing their bearish bets, with the NVDA short volume ratio rising to two-week highs at 54.48 on Friday.
The increase in bearish bets came as the semiconductor giant’s equity ended the May 2 session changing hands at $114.50, the highest level since late March. Short volume’s hitting of two-week highs also preceded NVDA shares’ 1.44% decline to $112.85 in the pre-market on Monday, May 5.
The extended session downturn indicates that the press time surge in bearish bets could precede a Nvidia stock correction, despite previous spikes leading to no major price swings.
For example, NVDA short volume ratio reached its second-highest two-week level of 53.05 on April 28, but did not lead to a substantial change in the price of semiconductor giant’s shares as the closing prices in the last three days of the month all came in within $0.50 of each other.
Microsoft and AMD biggest NVDA stock catalysts in early May
However, Nvidia stock’s correction in the Monday pre-market signals the volatility that could be expected from a rally primarily driven by external factors. The early May upswing was kickstarted by Microsoft’s (NASDAQ: MSFT) earnings report, which signaled confidence in the continued artificial intelligence (AI) infrastructure buildup.
Speculation that the proliferation of data centers is rapidly becoming a bubble akin to the Dot-com drove NVDA lower earlier in 2025, thanks to a significant portion of the semiconductor giant’s revenue coming from providing hardware for such infrastructural projects.
Considering that Nvidia is scheduled to publish its quarterly report in late May, the stock’s next swing will likely also be driven by external factors.
The blue-chip chipmaker’s biggest competitor, Advanced Micro Devices (NASDAQ: AMD), is set to unveil its results on May 6, thus giving investors a sneak peek into how companies within the industry have fared. Depending on the figures, the filing could either confirm the Microsoft-driven rally or demonstrate the foresight of the growing number of Nvidia short traders.
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