NVDA charges into earnings week on China optimism and a fresh short attack

NVIDIA heads into its May 20 earnings report riding a 12.4% weekly gain, a high-profile geopolitical tailwind, and a newly disclosed short position from Culper Research — the kind of mixed setup that rarely stays quiet for long.

The week's dominant driver was macro, not fundamental. CEO Jensen Huang joined President Trump's delegation to China, sparking a wave of speculation about easing chip export restrictions and renewed access to one of NVIDIA's largest potential markets. The stock closed Tuesday at $220.78, up 17% over the past month. That rally puts it about 18% below the mean analyst price target of $270, leaving a meaningful gap for bulls to close into the print.

Short positioning is not the story here — but a new short thesis just became one. NVIDIA's SI % of free float is a modest 1.15%, essentially flat on the week and nowhere near levels that signal meaningful bearish conviction. The borrow market reflects that ease: cost to borrow is running at just 0.43% annualised, and availability remains very loose — lending supply dwarfs current demand. What changed this week is Culper Research's disclosure of a short position, which adds a narrative overhang even if the data does not yet back it with volume. Worth watching whether that report shifts flows in the days before earnings.

Options traders are not reading cautious. The put/call ratio has dropped to 0.81, well below its 20-day average of 0.87 and close to its 52-week low of 0.70, placing it nearly one standard deviation below recent norms. That tilt toward calls is consistent with the bullish price action and the China catalyst — investors are positioning for continuation, not protection. The RSI sits at 69, approaching overbought territory, which adds texture to the debate about whether this week's move leaves the stock stretched heading into the release.

The Street is firmly in the bull camp. Wells Fargo lifted its target to $315 from $265 on May 12, keeping an Overweight rating — the freshest bellwether action in the dataset and a meaningful upward move. Broader analyst consensus sits at 47 buys and no sells in the disclosed data. The bull case centres on NVIDIA's dominance in AI GPU infrastructure and the China reopening optionality; the bear case, amplified by Culper's report, focuses on ASIC competition from hyperscalers and potential margin pressure. EV/EBITDA is running at 19x, and the forward P/E has expanded roughly 2.6 points over the past month — a re-rating that bakes in optimism the company still needs to earn on May 20.

The earnings history is not particularly reassuring for bulls banking on a gap-up reaction. The last two prints both produced negative next-day moves — down 4.1% after February's Q4 results and down 1.5% after the March event — with five-day losses of 5.1% and 4.4% respectively. Those prior reactions happened against a backdrop of elevated expectations; the setup this time carries similar pressure, with the stock up sharply into the print and the Street already positioned bullishly. Closest peer AMD surged 26% on the week, though it gave back 2.3% on Tuesday — a reminder that the semiconductor rally has been fast and broad.

The week of May 18 centres almost entirely on one question: whether Jensen Huang's China trip translates into anything concrete for revenue, and whether Blackwell demand commentary supports the current multiple expansion. How NVIDIA frames export policy risk in its guidance will determine whether the short thesis finds any traction.