Summary
- Nvidia rounds off Magnificent 7 earnings season on Wednesday after US markets close
- Chinese AI start-up DeepSeek has dented Nvidia’s share price, as its AI LLM (large language models) is less dependent on advanced GPUs
- In its last earnings release Nvidia almost doubled revenue, but analysts forecast a slowdown in year-on-year growth
- For the full year, though, Nvidia’s earnings are expected to more than double
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| Nvidia shares | Magnificent 7 stocks | DeepSeek’s shake-up | Tech and AI stocks to watch |
Nvidia earnings expectations
We know that Nvidia is swimming upstream in the run-up to its earnings release, and that the markets are likely to be jumpy given the threats that are appearing to its dominance of the AI market.
The reporting period in question, though, predates the emergence of DeepSeek, so it’s worth taking stock of the kind of numbers analysts are looking for, before getting too carried away with the future implications for Nvidia.
Here’s a summary of what two polls of Wall Street analysts yield in terms of consensus revenue and earnings expectations for Nvidia:
Analyst poll | Expected Q4 earnings per share (EPS) | Expected Q4 revenue |
|---|---|---|
FactSet | $0.84 | $38.02 billion |
London Stock Exchange Group (LSEG) | $0.84 | $38.05 billion |
These numbers, if accurate, imply a year-on-year increase of 61.5% for Nvidia’s quarterly earnings and revenue growth of slightly approximately 72%.
Big tech spending raises pressure on Nvidia
Increased competition has piled the pressure on Nvidia ahead of its earnings release. Investors have come to expect big things from the semiconductor giant, and if the rest of big tech earnings season so far is anything to go by, then the pressure will be on the company to post positive outlook numbers despite the DeepSeek uncertainty.
The challenge is that Nvidia’s biggest customers – the so-called cloud ‘hypscalers’ like Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) – have outlined robust spending plans despite DeepSeek seeming to suggest that AI can be done cheaper.
“Recent signals, including massive investment plans from the big tech giants, suggest Nvidia’s cutting-edge chips remain in hot demand,” says Matt Britzman, senior equity analyst, Hargreaves Lansdown.
Other semiconductor companies, such as Arm (NASDAQ:ARM) and Qualcomm (NASDAQ:QCOM) whose guidance has underwhelmed so far this earnings season have been punished by the market despite beating expectations on headline figures.
More competition for Nvidia
DeepSeek isn’t the only disruptive threat looming over Nvidia’s earnings release.
Last week, MoneyWeek’s sister site Tech Radar reported that SambaNova Systems, an AI startup founded by former Sun/Oracle employees, claims to have achieved the fastest deployment of the DeepSeek-R1 large language model (LLM) to date.
SambaNova claims to have reduced the hardware requirement to achieve 198 tokens per second per user (a measure of LLM efficiency) from 40 racks of 320 Nvidia GPUs to just 16 custom-built chips.
SambaNova is the fastest platform running DeepSeek,” said Rodrigo Liang, CEO and co-founder of SambaNova. “This will increase to 5X faster than the latest GPU speed on a single rack - and by year-end, we will offer 100X capacity for DeepSeek-R1.”
What is DeepSeek, and why does it matter for Nvidia’s earnings?
One of the key topics that Nvidia (NASDAQ:NVDA) CEO Jensen Huang is likely to address when he speaks to investors and analysts on Wednesday is DeepSeek, the Chinese AI start-up that has turned stock market assumptions about AI on its head.
In brief, DeepSeek released a large language model whose performance matches or exceeds that of ChatGPT – at a fraction of the training cost and, crucially for Nvidia, compute requirements.
Nvidia’s market cap fell $600 billion in a single day following what Silicon Valley venture capitalist Marc Andreessen called AI’s “Sputnik moment”; the biggest single-day loss in stock market history.
So, not only is Nvidia going to need to post strong results for the quarter that ended in December. It will also need to reassure markets that its business can withstand a disruption to the massive chip demand that, it had been assumed, will accompany AI adoption over the long term.
When does Nvidia announce earnings?
Nvidia’s earnings are scheduled to be announced on Wednesday 26 February, after markets close in the US.
US markets close at 4pm Eastern time zone (ET), so 9pm in the UK. It is hosting a conference call to discuss the results at 5pm ET – 10pm UK.
Normally, all we’d be able to say is that the results will be published at some time during that hour channel. Nvidia has however confirmed it will happen at approximately 1.20 pm Pacific time zone: 5.20pm ET / 9.20pm in the UK.
Good morning, and welcome to MoneyWeek’s live blog covering Nvidia’s earnings.
The big release is two days away, but we’re bringing all the analysis and updates ahead of time, as there’s plenty for investors to wrap their heads around before Nvidia’s earnings announcement.
Keep checking in for the latest analysis, predictions and reactions from what has become the stock market’s marquee quarterly event.