Options traders price in Nvidia's quarterly results as a more pivotal event for the broader market than the upcoming interest rate decision or the monthly inflation and jobs reports.

Certain research has shown that investors tend to put too much faith in past earnings. Over time, this leads to a stock being overbought in the lead-up to an earnings release and a short-term dip after the release. What Nvidia is experiencing is very normal.

The challenge for Nvidia now is living up to the market’s incredibly high expectations for future earnings–Wall Street expects 54% revenue growth in 2025.