Market Insights

Nvidia Earnings: Prepare for a Bumpy Ride Ahead

Amos Simanungkalit · 24 Feb 202519.9K Views

Image Credit: MSN

Nvidia's (NVDA) upcoming earnings report will be a key test for the AI sector, especially following a slow start to the year for the stock. Even if Nvidia exceeds Wall Street's expectations, it might not be enough to restore the momentum it had previously.

The stock faces several headwinds, including concerns over China’s AI startup DeepSeek, slower growth, and potential export restrictions, which could continue to weigh on the company. As a result, analysts are preparing for significant volatility. The options market is anticipating a 7% move in Nvidia’s stock after the earnings release, a drop from previous quarters but still representing a potential $230 billion swing in market value.

This quarter is different, as the volatility may linger longer. According to BayCrest’s David Boole, some investors may have already bought in after the DeepSeek sell-off, while others may remain cautious, making it harder for Nvidia to sustain a dramatic surge.

Nvidia’s impressive growth has slowed significantly this year, with shares up just 0.9% so far, compared to a 171% gain in 2024, when Nvidia contributed over 22% of the S&P 500’s growth. The company is no longer the top contributor to the index, as Meta now leads with a 13% contribution.

Despite short-term uncertainty, analysts remain optimistic about Nvidia’s long-term potential. Bank of America’s Vivek Arya notes that while the current quarter may face challenges due to Blackwell transitions, Hopper declines, and China restrictions, Nvidia’s strong future product pipeline, including the GB300 and Rubin, as well as growth in robotics and quantum technologies, should drive long-term growth.

For investors looking beyond Nvidia, Raymond James’ Matt Orton suggests focusing on software and cybersecurity stocks as the AI sector evolves, especially as the market continues to experience volatility. Orton sees cybersecurity as a particularly strong bet due to the rise in cyberattacks and ongoing corporate investment.

Nvidia’s earnings are set to be released on Wednesday, February 26, with revenue expected to rise 73% year-over-year, a significant slowdown from last year’s 265% growth.