NVIDIA is set to release its quarterly earnings report after the U.S. stock market closes on February 25. Market expectations are for revenue of $66.1 billion and earnings per share of $1.54. Analysts are generally optimistic but believe that strong results may not necessarily drive share price increases, with the real catalyst potentially emerging at the GTC Conference in March. This year, NVIDIA's stock price has risen by only about 2%, significantly underperforming the Philadelphia Semiconductor Index, which has gained 16% over the same period.
$NVIDIA (NVDA.US)$ The upcoming quarterly earnings report is expected to be generally optimistic by the market, but analysts believe that the stock price reaction may remain muted, with the real catalyst potentially not arriving until NVIDIA's GPU Technology Conference (GTC) in March.
After the U.S. stock market closes on February 25, AI supergiant NVIDIA will release its latest earnings report. The earnings call is scheduled for 2:00 PM Pacific Time on February 25, which is 6:00 AM Beijing Time on February 26.
BNP Paribas analyst David O'Connor expects the earnings report to have a "fairly positive" tone, but strong numbers may not necessarily lead to a significant rise in the stock price. He believes that NVIDIA might reserve its most market-influential information for disclosure at the GTC conference in March.
NVIDIA's stock price has risen by only about 2% this year, significantly lagging behind the 16% increase in the Philadelphia Semiconductor Index over the same period. Key issues investors are focusing on this earnings season include the competitive landscape of AI chips, cost pressures from rising memory chip prices on gross margins, and the trend in capital expenditures by hyperscale cloud providers.
Although performance expectations remain solid, the market may have already priced them in.
According to FactSet consensus estimates, NVIDIA’s adjusted earnings per share for the fourth fiscal quarter are expected to be $1.54, with revenue forecasted at $66.1 billion, including $60.7 billion from the data center business. Full-year revenue is projected at $213.8 billion, with first-quarter revenue guidance at $72.9 billion.
The issue is that robust performance data over the past few quarters has repeatedly failed to boost the stock price. Market expectations for NVIDIA are already quite high, leaving little room for upside surprises. O'Connor believes that investor attention has already shifted to the GTC conference in March.
This earnings report is also seen as a health check for AI infrastructure investment.
Andrew Rocco, equity strategist at Zacks Investment Research, stated that NVIDIA’s performance will provide a reference for assessing the state of AI spending while also revealing operational conditions of emerging cloud computing partners such as CoreWeave and NEBIUS Group.
Gross margin and competition are key concerns.
O'Connor pointed out that the continuous rise in memory chip prices raises the question of whether NVIDIA can maintain its gross margin amid mounting cost pressures, which will be one of the focal points of the earnings call.
Another issue is competition. $Alphabet-C (GOOG.US)$ followed by $Broadcom (AVGO.US)$ Custom chip projects, such as the jointly developed Tensor Processing Unit (TPU), are gaining increasing attention, leading the market to question whether NVIDIA's long-term dominance can be sustained.
HSBC analyst Frank Lee expects demand for NVIDIA GPUs to remain robust. Alphabet, Amazon, Meta, and Microsoft plan to spend a combined $650 billion on AI infrastructure this year, a figure that speaks volumes about the scale of demand.
Frank Lee believes that NVIDIA GPUs will remain the mainstream choice for AI computing power investment in the foreseeable future. However, the question of how long this 'foreseeable future' will last is something no one can answer with certainty.
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