This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
NVIDIA is all over the news these days, and rightly so. After all, the stock is up 235 percent in the past year alone, having added the entire market capitalization of Netflix or AMD within the span of just a few hours earlier this week after posting another across-the-board stellar quarterly earnings. Yet, there is another asset that is poised to give NVIDIA a run for its money: the humble cocoa bean.
Traders spent $20 BILLION in options on Nvidia over the last week—more than the other six stocks in Mag 7 **combined** pic.twitter.com/JF1VdsOBlG
— Gunjan Banerji (@GunjanJS) February 25, 2024
Such was the level of interest around NVIDIA shares this week, that traders spent a whopping $20 billion betting on the stock, eclipsing the rest of the “Magnificent 7” grouping of high-flying names by a wide margin.
Nvidia $NVDA CEO Jensen Huang is currently worth $69 Billion (Up from $44B at the start of the year) making him the 21st richest person in the world – Bloomberg Billionaire Index pic.twitter.com/QTQkZZ51wn
— Evan (@StockMKTNewz) February 25, 2024
Also, the GPU manufacturer’s AI-driven rally has now made its CEO, Jensen Huang, the 21st richest person in the world, with his net worth increasing by around $25 billion since the start of 2024 alone!
Where were you when you first realized that $NVDA and the cocoa bean are in the essence the same trade?$COCOA pic.twitter.com/oT0s9lROCE
— Sven Henrich (@NorthmanTrader) February 24, 2024
Yet, NVIDIA’s blazing glory is currently under the threat of being upstaged by none other than the cocoa bean.
As can be seen in the above chart, the price of the cocoa bean – the most important ingredient to make chocolate – is up an astonishing 166 percent over the past year. And, with its supply woes set to continue, the cocoa bean appears poised to upstage NVIDIA’s rip-roaring rally.
Why is the Price of the Cocoa Bean Increasing?
There are several factors that are responsible for creating an almost perfect supply storm for the cocoa bean:
- The last major cocoa tree planting spree occurred in the early 2000s in West Africa, which accounts for around 75 percent of the current global supply. Those trees are now around 25 years old and well past their prime.
- Bad weather, accentuated by the ongoing El Nino phase of the Pacific Ocean, has decimated cocoa trees in Ghana and Ivory Coast.
- The world is heading toward an annual supply deficit of between 300,000 and 500,000 tons, which is the largest such shortfall in over six decades.
So, with NVIDIA’s GPUs and your regular cup of hot chocolate both set to become markedly expensive over the course of this year, for completely disparate yet valid reasons, of course, perhaps the Federal Reserve has been a tad hasty in declaring the inflationary genie all but vanquished.