Nvidia Earnings Due on Wednesday. Still the Top AI Stock to Buy?
Nvidia (NASDAQ:NVDA) is scheduled to report fourth quarter earnings on Wednesday, Feb. 26 after the market closes. All eyes will be trained on the chipmaker as a lot is riding on the report. Especially after the DeepSeek announcement rocked the artificial intelligence market, and none more so than Nvidia, which suffered the single biggest one-day […] The post Nvidia Earnings Due on Wednesday. Still the Top AI Stock to Buy? appeared first on 24/7 Wall St..
Nvidia (NASDAQ:NVDA) is scheduled to report fourth quarter earnings on Wednesday, Feb. 26 after the market closes. All eyes will be trained on the chipmaker as a lot is riding on the report.
Especially after the DeepSeek announcement rocked the artificial intelligence market, and none more so than Nvidia, which suffered the single biggest one-day loss for a stock in history, investors want to know whether they should buy ahead of the news.
AI chipmaker Nvidia (NVDA) is scheduled to report fiscal 2025 Q4 earnings on Wednesday, Feb. 26.
The report will be the one most investors watch, not so much with what Nvidia achieved in the quarter, but what it is signaling for the year ahead.
Nvidia’s growth rates are slowing, which is to be expected but can signal future issues, though the chipmaker looks solid right now.
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A blowout result with robust guidance could send NVDA stock skyward again. Muted guidance could cause it to tumble. It won’t be so much what Nvidia did in the fourth quarter, which is likely to be a gangbusters result, rather it will be where the chipmaker sees its business heading over the next year that will be the deciding factor.
The juggernaut is slowing
Wall Street expects a big Q4. Revenue is expected to soar 72% to $38.2 billion from last year’s $22.1 billion. Earnings are forecast to surge from $0.52 per share to $85, a 63% increase.
Analysts are looking for $195.9 billion in sales in 2025, a near 52% jump year-over-year while profits are estimated at $4.43 per share, a heady 50% gain from 2024.
However, those rates represent a slowdown in growth. Immediately in the aftermath of generative AI chatbot ChatGPT’s release in late 2022, Nvidia grew at triple-digit rates, but has seen those rates decline to high-double-digit percentages.
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Nvidia (NVDA) Adjusted Quarterly Growth Rates |
|||||||||
| FYQ423 | FYQ124 | FYQ224 | FYQ324 | FYQ424 | FYQ125 | FYQ225 | FYQ325 | FYQ425 | |
| Revenue | (21%) | (13%) | 101% | 206% | 265% | 262% | 122% | 94% | 72%* |
| EPS | (33%) | (20%) | 429% | 593% | 486% | 461% | 152% | 103% | 50%* |
*estimates
No company can keep growing in perpetuity at triple-digit rates, so it is natural for them to slow, but it’s also a yellow flag when growth rates slow by 50% or more and Nvidia is expected to see a 73% decline in the rate of revenue growth this coming quarter and a 90% dropoff in earnings growth.
Of course, we’re talking very large numbers here, tens of billions of dollars, but Nvidia’s growth is slowing so investors should take note of it as such declines often hint at future problems, even earnings shortfalls.
Competition is rising
Because the growth has come primarily from Nvidia’s AI chips, and that has become its primary moneymaker (data centers, which is where NVDA’s AI business is housed, represents 88% of total revenue), it suggests potential issues in the future.
While Nvidia remains the premiere AI chipmaker to the world, it is seeing increased competition. Advanced Micro Devices (NASDAQ:AMD) has worthy rival chips and will be releasing its next generation crop of semiconductors later this year, while Intel (NASDAQ:INTC), to a lesser degree, is also attempting to make inroads.
And then there are Nvidia’s own customers, including hyperscalers like Amazon (NASDAQ:AMZN), Meta Platforms (NASDAQ:META), and Microsoft (NASDAQ:MSFT) making their own in-house chips so as to not have to rely upon Nvidia so much. It presents another potential headwind.
Still a solid outlook
Although that picture indicates possible problems looming on the horizon, it’s not as dire as all that. For example, Amazon CEO Andy Jassy recently told analysts, “we obviously have a deep partnership with Nvidia and will for as long as we can see into the future.” Other hyperscalers undoubtedly feel the same. No on is abandoning the chipmaker en masse. It’s more of nibbling around the edges.
Further, because Nvidia’s chips are so advanced, its biggest and best customers want access to its latest technology. It is why its inventory of its latest Blackwell chips is sold out till the end of the year and Nvidia’s foundry partner Taiwan Semiconductor Manufacturing (NYSE: TSM) will double its capacity by year-end to handle production.
That indicates whatever speed bumps Nvidia may run into is still far into the future. With artificial intelligence still in its infancy, there remains a long runway of growth.
Nvidia seems poised to post a stellar earnings report, including guidance for the coming year. Now is not the time to sell your NVDA stock. My recommendation is to not buy shares with both hands before Wednesday, maybe just use one. Then, if Nvidia’s stock does experience a pullback at some point, become more aggressive in picking up shares.
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