Nvidia, a leading player in the artificial intelligence (AI) chip market, is set to release its fiscal fourth-quarter 2025 earnings report on Feb. 26. The company’s performance and outlook are being closely watched by investors and analysts alike.
Despite recent challenges, including competition from Chinese start-up DeepSeek and concerns about potential reductions in demand for Nvidia’s AI chips, the company is expected to deliver strong results. Bank of America has reiterated its buy rating on Nvidia and named it a top pick ahead of the earnings call. Analysts anticipate a modest sales beat or inline guidance, although they foresee lower gross margins in the first quarter due to product transitions and China restrictions.
However, Nvidia’s dominant position in the AI chip market and the growing demand for AI infrastructure are expected to drive the company’s growth.
Nvidia’s fiscal strength and outlook
Nvidia is currently launching its Blackwell architecture, a customizable product with seven different chips and various networking options.
While this complex rollout may involve extra costs that could impact margins, the company has a track record of surpassing expectations, having beaten earnings forecasts for at least the past four consecutive quarters. The DeepSeek news, which raised concerns about potential reductions in investment in GPUs for training, is unlikely to pose a significant threat to Nvidia. The company has emphasized the importance of high-powered GPUs in inference, suggesting that the world will need more of these chips to power AI models through their tasks.
Nvidia’s upcoming earnings report presents an opportunity for the company to dispel worries about the DeepSeek news and highlight the growing importance of inferencing as a key growth driver. With a current valuation of 27 times earnings, Nvidia appears attractively priced, and investors may see this as an opportune moment to invest in the company, potentially sending its stock soaring following the report. As the AI market continues to expand, with projections suggesting it could reach beyond $1 trillion by the end of the decade, Nvidia is well-positioned to capitalize on this growth.
The company’s innovation, profitability, and leadership in the AI chip market make it a compelling investment opportunity, despite the challenges posed by government policies and competition.
