Nvidia stock has fallen 5.8% so far in 2025. The biggest damage to the AI chip designer’s stock took place Monday, January 27 — a day after my Forbes post about DeepSeek’s R1, a complex reasoning model built for $5.7 million in three months.
Since DeepSeek said the company used a lower-powered version of Nvidia’s GPUs, I wondered whether more large language model developers would follow DeepSeek’s lead and not build models faster and more cheaply – possibly not buying as many of Nvidia’s latest, most expensive chips.
The $600 billion drop in Nvidia’s stock market value that day did not deter retail investors. Instead, they have poured more than twice as much money — $5.7 billion — into Nvidia stock as of February 21 than last year, according to Vanda Research data featured by the Wall Street Journal.
Will Nvidia bulls be rewarded after the company reports fiscal fourth quarter results? The answer depends on whether Nvidia beats and raises. More specifically, if Nvidia’s Q4 revenue and earnings grow faster than the FactSet consensus of 72% and 59%, respectively, and the company forecasts faster than expected growth and higher margins for the current quarter, Nvidia stock could soar.
Wall Street will be focusing on whether Nvidia’s 2024 Blackwell production bottlenecks are loosening, whether cloud services providers will keep spending more on data centers — in light of DeepSeek’s success with cheaper chips, and the impact of Trump’s tariffs on Nvidia’s outlook.
Nvidia remains bullish about its future. The drop in the company’s stock price is an “overcorrection,” CEO Jensen Huang said, according to Yahoo! Finance. Demand for the company’s GPUs will remain strong because major processing capability is needed to enable the shift from training AI models to post-training, he added.
What Investors Are Looking For
Here are four things investors will be looking for.
Can Nvidia Reverse Its Revenue Growth Deceleration?
Nothing would be better for Nvidia bulls than a higher-than-expected growth forecast. Sadly that growth has been slowing down since the company reported faster than 2o0% growth every quarter between the third quarter of 2023 and the first quarter of 2024.
Here are the year-over-year quarterly revenue growth rates, according to Macrotrends:
- Q2 2023 revenue growth: 101.5%
- Q3 2023: 205.5%
- Q4 2023: 265.3%
- Q1 2024: 262.1%
- Q2 2024: 122.4%
- Q3 2024: 93.6%
- Q4 2024 forecast: 72%, according to FactSet.
At the rate growth has been declining in recent quarters, I would not be surprised if Nvidia forecasts 50% revenue growth for the current quarter.
Details On How Much Tariffs Will Crimp Nvidia China Revenues
Last November, one analyst said Trump would be good for Nvidia. That prediction could be a bit off.
The analyst expected higher margins and benefit from the Trump presidency. Nvidia “is on track to see Blackwell revenue surge, surpassing Hopper revenue by Apr-Q (gross margins to also recover toward mid-70’s by mid-CY [calendar year] 2025),” according to CFRA analyst Angelo Zino’s report feature in Barron’s. “Geopolitical uncertainties remain a headwind, but we think Nvidia is better positioned under a Trump administration.”
Now reports are emerging of a policy curveball. The Trump administration has started discussions about increasing export chip curbs to China that could weigh on Nvidia’s “revenue by making it tougher to sell its products to tech companies like Alibaba Group,” according to Barron’s.
Investors may be listening for what Nvidia has to say about this topic.
Loosening Of Blackwell Production Bottleneck
The last time Nvidia reported quarterly earnings, Blackwell production costs were cutting into the company’s adjusted gross profit margins – which the company attributed to clearing out production bottlenecks, according to my November 2024 Forbes post.
“The challenge that we have is how fast can we get that supply, getting ready, into the market this quarter,” Nvidia CFO Colette Kress told analysts in the post-earnings conference call last November. “We’ll be back on track with more suppliers as we turn the corner into the new calendar year. We’re just going to be tight for this quarter.”
The Blackwell problems were reportedly tied to design flaws. When deployed in server racks, the chips overheated, “raising alarms about the ability to integrate them efficiently into existing data center models,” noted Reuters.
Now that we are into the new calendar year, investors will be listening for whether Kress’ hope for bottleneck relief has appeared. If not, Nvidia stock could drop.
Impact Of DeepSeek On Cloud Services Capital Expenditures
Huang said he may discuss “the ramifications of DeepSeek’s advancement for AI investments” during Wednesday’s earnings call.
Recent earnings calls from hyperscalers such as Amazon, Microsoft, Google, and Meta Platforms suggested they would spend $320 billion in data centers and related hardware in 2025.
Since then, Microsoft — which had said it intends to spend more than $80 billion — has reportedly canceled some leases with “at least two private data center operators,” noted CNBC.
Microsoft did not confirm this report. “Our plans to spend over $80B on infrastructure this FY remains on track as we continue to grow at a record pace to meet customer demand,” a Microsoft spokesperson emailed CNBC on February 24.
Nevertheless, investors will be eager to learn whether Nvidia quantifies how much DeepSeek is likely to affect hyperscaler capital expenditures.
Huang is an amazing entrepreneur and CEO and it will take all his ability to exceed investor expectations on Wednesday.
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