Nvidia faces a pivotal moment as it prepares to release its fourth-quarter and 2024 financial results on February 26. After experiencing a volatile start to 2025, with its stock surging to record highs before a sharp decline, the company’s performance is under intense scrutiny. As a leading player in the AI chip industry, Nvidia’s outcomes are not only crucial for its investors but also hold significant sway over the broader stock market dynamics.
Recent developments show a complex landscape for Nvidia. The initial drop in its share price was triggered by the emergence of DeepSeek, a Chinese startup making waves in Silicon Valley with its cost-efficient AI solutions. This contrast with past performances highlights the evolving challenges and competitive pressures Nvidia faces in maintaining its market position.
How Will Nvidia’s Financial Results Affect Its Stock?
“To avoid a sell-off, Nvidia must meet its ‘normal exceed’,”
said Ted Mortonson, managing director at Baird. Wall Street analysts anticipate a significant increase in Nvidia’s quarterly revenue by 72 percent to reach $38 billion and a profit jump of 64 percent to $19.6 billion. However, sustaining the share price’s upward trajectory may require results that surpass these expectations.
What Is the Impact of DeepSeek’s AI Breakthrough?
DeepSeek’s advancements initially suggested a potential decline in demand for AI chips. Despite this, Morningstar analyst Brian Colello maintains that AI GPU demand continues to outstrip supply. Nvidia’s CEO Jensen Huang acknowledged DeepSeek’s contributions, stating,
“Making everybody take notice of opportunities for more efficient A.I. models.”
This indicates that Nvidia views the competition as a catalyst for innovation rather than a threat.
Will Microsoft’s Data Center Decisions Influence Demand?
The announcement by TD Cowen that Microsoft has canceled leases for two data center operators raised concerns about AI compute demand. Analysts interpreted this as a sign of potential oversupply. In response, Microsoft stated it is “
well positioned
” to meet increasing demand but may adjust its infrastructure strategically. This development adds another layer of uncertainty to Nvidia’s market outlook.
Looking ahead, Nvidia’s transition to its next-generation Blackwell chips and sustained demand from major tech companies like Microsoft, Meta, Alphabet, and Amazon will be critical factors influencing its performance. The company’s ability to navigate competitive pressures and meet the high demand for AI technology will determine its stock trajectory and overall market impact.
