Nvidia Corp. is set to report fourth-quarter earnings on Wednesday, a release that could determine whether artificial intelligence remains the driving force of Wall Street’s tech boom or if recent doubts about AI infrastructure needs will trigger a broader selloff.
The chipmaker’s earnings reports have become some of the most closely watched events on Wall Street, given its role as the undisputed leader in AI chips. However, this quarter carries added weight after the emergence of China-based startup DeepSeek, which claims to have developed AI models that require far fewer chips and computing power than previously thought necessary. This has shaken investor confidence, and for the first time since 2022, Nvidia is entering an earnings report with its stock trading lower than its previous release.
Nvidia’s stock, which had been recovering from earlier declines, remains below its pre-DeepSeek levels, with hedge funds pulling back from tech in recent weeks. According to Shana Sissel, CIO at Banrion Capital Management, the startup’s breakthrough has challenged the belief that Nvidia is invincible, leading to increased caution among investors. Options trading data suggests an 8.5% swing in either direction following the earnings report.
Adding to the uncertainty, Microsoft Corp. recently canceled major data center leases in the U.S., signaling potential concerns about overbuilding AI infrastructure. Despite this, major tech giants—Nvidia customers like Microsoft, Amazon, Alphabet, and Meta—have reaffirmed or even increased their capital expenditure (capex) plans for AI, reinforcing optimism that demand for Nvidia’s chips will persist.
While some worry about Nvidia’s future growth trajectory, Wall Street analysts remain overwhelmingly bullish. Nearly 90% of analysts tracked by Bloomberg recommend buying the stock, with just one firm (Punto Research) issuing a sell rating. The consensus forecast calls for $38 billion in quarterly revenue, a 73% increase year-over-year, while Nvidia’s valuation has dropped to 28 times estimated earnings—below its 10-year average and close to the Nasdaq 100’s multiple of 26.
With Nvidia’s Blackwell chip and sustained AI investment from tech giants, some investors see room for multiple expansion if concerns ease. As Matt Stucky of Northwestern Mutual Wealth Management put it, if investor doubts fade, Nvidia’s stock could regain its upside momentum.
The earnings report will be a critical moment for Nvidia and the broader AI sector, determining whether the company can reaffirm its dominance or if its once-unshakable position faces further challenges.