Is Nvidia stock seeing heavy short interest?

Late November 2024 brought a stock market twist for semiconductor giant Nvidia (NASDAQ: NVDA), as the shares entered a notable decline after the company posted an otherwise strong quarterly report.

To be precise, NVDA shares retreated 6.48% in the last five sessions to Nvidia stock price today of $135.46.

The downward trading has also raised the question of whether an increase in bearish bets accompanies the evident selling pressure or if most traders are certain NVDA stock will bounce back – or, at the very least, are uncertain the pullback will be deeper.

As it turns out, the relatively protracted decline has not resulted in a notable uptick in short positions targeting Nvidia shares, per the data retrieved on November 28 from Fintel.

Specifically, the short ratio stood at 38.94 on November 27 – the last session before Thanksgiving – indicating bearish bets are near their 10-day lows. The lowest ratio within the time frame – recorded on November 18 – stood at 32.12.

The relatively low level on Wednesday becomes particularly pointed once the fact that the ratio ran as high as 58.49 and 58.04 on November 15 and November 22 is considered.

In general, the first half of the month featured the highest NVDA short interest recorded since mid-August, as exemplified by the data retrieved from Nasdaq on Thursday. Specifically, it climbed from 245 million published on October 31 to 276 million on November 15. On August 15, the average was reported at 293.5 million.

The lack of bearish bets on NVDA shares explained

Such an apparent lack of bold short positions can be explained by the dissonance between Nvidia’s earnings reports, analyst forecasts, and price action. Though the forward guidance was noted as lightly below the most bullish hopes, the company beat most forecasts and recorded significant growth.

The subsequent downtrend can then best be explained by the exceedingly high hopes the chipmaking powerhouse has set in recent years. The stock is up 731.84% in the last two years for example.

Furthermore, the strong figures indicate a deeper pullback is unlikely – though a correction to $130 is not impossible – unless there is a major stock market or external shock before Nvidia publishes its next quarterly results, scheduled for February 2, 2025.

Still, as seen during the summer, there is a possibility NVDA stock will trade sideways for some months, barring a major announcement or, again, a major shock, with there being a probability the shares’ actual next direction will become clear only after the report covering the first trimester of calendar 2025 is out.

Indeed, that particular report will be the first to showcase the effects of the end to the ‘business-as-usual’ policy, especially if President-Elect Donald Trump quickly implements some of his economic ideas – chiefly the tariffs – as soon as he enters the Oval Office.