Nvidia: Undervalued Relative to Its Growth
Nvidia has been in a consolidation phase, trading between roughly $170 and $195 over recent months and sitting about 17% below the all-time highs reached last October. Despite being down around 7% on the year, the stock caught a meaningful bid — jumping about 4% in a single session — fueled by news of a $2 billion investment into Marvell Technologies.
This investment underscores Nvidia's broader strategy of using its substantial free cash flow to invest in companies throughout the AI ecosystem, effectively creating a virtuous cycle: the more these partner companies grow, the more Nvidia GPUs and technology they consume. Everyone wants to be part of the Nvidia ecosystem, and Nvidia is actively cultivating that dependency.
What stands out from a valuation perspective is striking. Prior to the recent bounce, Nvidia's forward price-to-earnings ratio was roughly equivalent to that of the S&P 500 as a whole — yet Nvidia is delivering 70% year-over-year revenue growth while the broader index grows at a fraction of that pace. That disconnect suggests the stock may be undervalued relative to its growth trajectory, particularly following the positive commentary from CEO Jensen Huang at the GTC conference.
In the options market, a trader made a notable bullish bet early in the session: purchasing 10,000 contracts of a $180/$190 call spread expiring in the April 17th monthly options — just 17 days out. The debit was only about $1.05 on a $10-wide spread, placing the breakeven at $181.05, roughly 5% above the share price. It's a cheap, defined-risk way to gain upside exposure. The trade caps gains at $190, but the probability of Nvidia surging past that level in two and a half weeks is low — making the capped structure a reasonable tradeoff for the reduced cost of entry.
Western Digital: A 550% Rally and Still Climbing
Western Digital has been one of the most extraordinary performers in the market, with gains exceeding 550% over the past 12 months and over 50% year-to-date. To put that in perspective, if you asked most investors to name a stock that has risen more than 500% in a single year, very few names would come to mind — yet Western Digital has done exactly that, recovering dramatically from a low near $24 just three years ago.
The stock received a fresh catalyst with a Bernstein upgrade to outperform, accompanied by a price target of $340 — up from $170 and above the stock's prior three-year high of $319. Bernstein may have been late to the rally, but their target suggests further upside remains.
There had been a brief drawdown the previous week on concerns about potential memory efficiency breakthroughs — including developments from companies working on reducing memory requirements in AI workloads. However, the fears proved short-lived. Western Digital's management emphasized robust demand during their recent earnings call, particularly on the hard disk drive side of the business, which gives them a different demand profile than pure flash or DRAM players like Micron. The company also retains a stake of over 7% in SanDisk, which it had previously spun off, providing additional value as SanDisk rallies alongside the sector.
A bold options trade emerged in the April 24th weekly expiration — about 24 days out. A trader purchased over 4,000 of the $315 strike calls at an average debit of $6.70, placing the breakeven at $321.70. That's roughly 21% above the current share price and would represent a new all-time high. It's an aggressive bet, but it reflects conviction that the momentum in memory-related names is far from exhausted.
Alcoa: Geopolitical Supply Shocks Lift Aluminum
Alcoa — the storied aluminum producer that once kicked off earnings season before financials took that mantle — has surged 4% in a single day, 12% on the week, and 24% on the year, approaching four-year highs.
The catalyst is geopolitical. Disruptions in the Strait of Hormuz, already well known for their impact on oil and liquefied natural gas shipments, have now extended to aluminum. Attacks on refineries in the Middle East have sent aluminum prices skyrocketing by removing a significant portion of low-cost supply from the global market. Roughly 9% of global aluminum production originates in the affected region, and any sustained disruption meaningfully tightens supply.
For Alcoa, this is a tailwind. The company is vertically integrated — it mines bauxite, refines it into alumina, and smelts it into aluminum. When foreign supply is disrupted, Alcoa's own production assets become more profitable and strategically valuable. Higher aluminum prices flow directly to the bottom line for a company with this kind of operational control over its supply chain.
The options market reflected this optimism with a longer-dated bullish trade. A trader bought over 2,500 of the June $80 strike calls — 79 days to expiration — at just under $4 per contract. The breakeven sits near $84, about 28% above the current share price. That's a significant move to require, but geopolitical conflicts have a history of producing sudden, outsized moves in commodity-linked names. Call volume was running at double the normal daily average, reflecting the surge of interest driven by developments over the prior week.
The Common Thread
Across all three names — Nvidia, Western Digital, and Alcoa — the options market is telling a consistent story of bullish conviction. Each trade reflects a belief that the current catalysts have legs: AI ecosystem investment for Nvidia, insatiable memory demand for Western Digital, and geopolitical supply disruption for Alcoa. The positioning ranges from near-term defined-risk spreads to longer-dated directional bets, but the directional bias is unmistakable. In a market environment marked by uncertainty, these traders are making clear, aggressive bets on continued upside.