Nvidia’s financial results will set the tone for AI-related stocks, with high expectations leaving little room for error. The strong demand for AI continues, but supply chain limitations and rising competition could undermine Nvidia’s dominance. Market volatility is expected, with options market pricing indicating a potential price movement of around 7-8%—investors should prepare for intense fluctuations.
As Jacob Falkencrone, the chief investment strategist at Saxo, comments, the AI revolution has its king, and that king is Nvidia. But will upcoming financial results confirm Nvidia’s right to the throne, or will cracks start to appear? Given Nvidia’s dominant position in AI infrastructure, the company’s financial report on February 26 will be a pivotal moment—not just for the company, but for the entire AI sector.
With very high expectations already priced into the stock, Nvidia must flawlessly meet them to maintain its upward trend. A misstep could trigger waves of uncertainty not only in AI-related stocks but also across the broader market.
Key Indicators to Watch
Revenue is expected to reach $38 billion, which would represent a 72% year-over-year increase. The projected earnings per share (EPS) is expected to rise to $0.84, marking a 62% jump.
Investors will also be paying attention to gross margins, a key profitability indicator, especially with the launch of the next-generation Blackwell chips. Although product launches may put pressure on profits, Nvidia maintains a strong margin buffer. Last quarter, Nvidia reported a gross margin of 75%, with projections for the upcoming quarters hovering around 73%. Investors will be looking for reassurances that these levels will remain intact despite rising production costs.
Data center growth continues to be the main driver of Nvidia’s revenue. It is supported by major hyperscalers who are ramping up investments in AI infrastructure. The company has performed well, exceeding Wall Street estimates in 16 out of the last 18 quarters. However, with current high expectations, even strong results may not be enough to sustain stock growth, according to Jakob Falkencrone from Saxo.
Why Nvidia’s Results Matter
Nvidia is no longer just a semiconductor manufacturer—it’s the backbone of artificial intelligence. Its GPU chips power AI models like OpenAI’s ChatGPT, Meta’s AI initiatives, and Tesla’s autonomous driving technology. With a valuation exceeding $3.3 trillion, Nvidia’s financial results have a significant impact on the entire market, particularly on technology indices like Nasdaq. Due to its dominant position, any signs of weakness in Nvidia’s report could have a profound impact on investor sentiment toward AI-related stocks as a whole.
Challenges to Nvidia’s Leadership in AI
Nvidia’s eagerly awaited Blackwell architecture is expected to deliver a massive boost in AI performance, but execution risks still loom. Supply chain constraints and production delays could affect the volume of deliveries, which in turn might have a short-term impact on revenue growth. Investors will want to know whether Nvidia can meet demand or if customers will need to seek alternatives.
At the same time, competition is rising. In January, Nvidia’s stock dropped 17% in a single day after Chinese AI company DeepSeek claimed it could train models using far fewer GPUs. Although Nvidia quickly rebounded, the episode raised concerns about performance growth, which could limit the company’s long-term trajectory. CEO Jensen Huang dismissed these concerns, emphasizing that AI workloads are becoming increasingly computationally demanding. Investors, however, will closely monitor any updates regarding potential threats to performance.
AI Spending Continues, But Can Nvidia Capture It?
Amazon, Google, and Microsoft are investing billions in AI infrastructure, which ensures steady demand for Nvidia’s chips. Europe is also ramping up its AI investments. France has allocated significant private sector funds for AI infrastructure, while the European Union is working on expanding supercomputing capabilities to boost its competitiveness in the global AI race. These initiatives reflect a strategic push to reduce dependence on external technology suppliers.
At the same time, Elon Musk has made significant investments in Nvidia hardware, underscoring the company’s crucial role in powering next-generation AI applications. However, with the supply constraints on Blackwell chips and rising competition, Nvidia cannot afford any missteps in meeting this demand.
How Should Investors Prepare for Volatility?
Nvidia’s financial reports are consistently among the most influential events in the tech market, and the upcoming report is no exception. The options market is pricing a potential 7-8% move after the results, indicating a wide range of possible outcomes. Due to Nvidia’s dominance in AI, any deviations from expectations—positive or negative—could have a significant impact on the stock price.
How might the stock react? Here are three possible scenarios:
- If Nvidia exceeds expectations and raises guidance: A strong rally is likely, though profit-taking may limit further gains.
- If Nvidia meets expectations but does not raise guidance: The stock may remain flat or even decline, as much of the optimism is already priced in.
- If Nvidia fails to meet expectations or reports supply chain issues: A sharp drop is likely, but long-term investors may see this as an opportunity to buy.
Given the mix of long-term investors, short-term traders, and hedge funds holding Nvidia stock, even a strong report could lead to volatility, as some investors will look to lock in profits. Investors should be prepared for sharp moves in either direction.
Investors should pay particular attention to comments from the management regarding:
- Blackwell chip supply: Can Nvidia meet demand, or will production constraints slow growth?
- Profitability and margins: Will Nvidia maintain historically high gross margins despite rising production costs?
- Tariffs and trade risks: Could regulatory challenges affect global sales, particularly in China?
- AI spending by hyperscalers: Are Amazon, Microsoft, and Google continuing to ramp up their AI investments?
- Guidance for the next quarter: Does Nvidia expect continued strong growth, or are there signs of slowing demand?
A Pivotal Moment for AI Stocks
The financial report isn’t just about Nvidia—it’s about whether the AI revolution can maintain its rapid growth. If Nvidia delivers the expected results, stocks of AI-related companies may rise. Otherwise, the sector may face a reassessment of its growth pace.
One thing is certain: Nvidia remains a driving force behind the development of artificial intelligence, and the upcoming report will either confirm its dominance or reveal weaknesses. Regardless of the outcome, investors should prepare for an exciting few days ahead.
Source: https://ceo.com.pl/raport-nvidii-26-lutego-czy-krol-ai-utrzyma-tron-25282
