Nvidia is set to announce its Q4 earnings this Wednesday, continuing its impressive run with shares climbing 100% over the past year, driven by the rapid rise of artificial intelligence (AI). As major tech companies like Amazon, Meta, Microsoft, and Alphabet significantly increase their spending on AI infrastructure, Nvidia has emerged as a key beneficiary due to its high-performance chips. These companies are investing tens of billions into AI, and Nvidia’s position as a leader in chip manufacturing has allowed it to capitalize on this surge.
According to Josh Gilbert, Market Analyst at eToro, “AI’s reliance on powerful chips means Nvidia holds an enviable position in this race to the top; regardless of who wins, Nvidia is reaping the rewards.”
However, the company is not without challenges. One major concern comes from the recent entry of DeepSeek, a Chinese competitor whose launch in late January wiped out US$600 billion of Nvidia’s market value in a single day. DeepSeek’s innovative technology presents a future where companies may no longer need costly, high-end GPUs to run complex AI models, potentially threatening Nvidia’s market stronghold.
In addition to DeepSeek, Nvidia faces ongoing issues with supply shortages. “Demand outstripping supply has hurt Nvidia in previous earnings reports,” Gilbert added. “Despite executives assuring Wall Street that Blackwell revenue is expected to exceed ‘several billion dollars’ in Q4, production capacity constraints remain a challenge. Where there’s unfulfilled demand, there’s always room for competitors.”
Despite these potential setbacks, market expectations for Nvidia’s earnings remain high. Analysts forecast revenue at US$38.2 billion and net income at US$20.9 billion. The spotlight will be on whether Nvidia can once again deliver blockbuster numbers and whether the company raises its future guidance, as investors now expect near perfection from the tech giant.
“The consensus estimate is optimistic, but with such high expectations, Nvidia needs to meet them head-on to maintain its momentum,” concluded Gilbert.
