Microsoft and Amazon See Bullish Trades as Nvidia Faces Limited Upside
Large traders are placing significant bets on Microsoft and Amazon as they show resilience in a market where AI hardware stocks, including Nvidia, are under pressure. The divergence in performance between hyperscalers and AI hardware companies is evident in the options market, with massive bullish spreads emerging in MSFT and AMZN.
The trades involve buying upside exposure over the next two months while selling higher-strike Calls to reduce costs, signaling a bullish view on both stocks. In Microsoft, a trader opened 17,000 Nov. 20 $535/$605 bull call spreads for roughly $18.7 million in net premium, with a breakeven at $546.02, about 9.5% above the stock price when the trade crossed.
Amazon saw a similar trade: 17,500 Nov. 20 $270/$320 bull call spreads for a net cost of roughly $14.3 million, with the breakeven sitting at $278.19, about 10% above the stock price at execution.
Nvidia showed the opposite setup, however, with a massive 70,000-lot Nov. 20 $230/$275 bear call spread crossing for roughly $42.6 million in net premium received, leaving room for a rebound but suggesting NVDA could struggle to move meaningfully above $236 by expiration.
The market's reassessment of AI Capex growth and returns may be the key factor driving this divergence. MSFT and AMZN are major AI infrastructure spenders, but they also monetize AI through cloud, advertising, AI assistants, and enterprise applications.