If the battle over artificial intelligence is the Super Bowl of tech, Nvidia has dominated like the seemingly unbeatable Kansas City Chiefs. But things changed when alternative AI chips and Chinese challengers led by DeepSeek stormed on the field.
After a 1,300% run in just over two years, Nvidia stock looks like it's tiring out. Nvidia investors must also grapple with the stock's recent unconventional patterns ahead of its Q4 earnings report, according to IBD analysis. Suddenly, Wall Street isn't so sure about the Nvidia juggernaut as it awaits the next thing to advance the company's narrative, said Futurum Group analyst Daniel Newman.
"They've done so well for so long that a lot of people had had enough of Nvidia and wanted something new," Newman said. "The parallel I would use is it was like everybody booing the Chiefs coming out of the tunnel at the Super Bowl," where the Chiefs this month were defeated.
When Does Nvidia Report Earnings For Q4?
The next potential catalyst for what had been the world's most valuable company may come on Feb. 26, when Nvidia is scheduled to post its fiscal fourth-quarter earnings. The most important part of the report will be Nvidia's earnings and sales guidance, particularly what the tech giant says about its Blackwell chip. Now Nvidia's flagship AI chip, Blackwell began shipping late last year. Any sign of an unimpressive Blackwell sales ramp could spell trouble for Nvidia.
Analysts say the AI powerhouse likely will need more than a beat-and-raise report to jump-start Nvidia stock. Shares of the semiconductor giant have been trading mostly sideways for four months. They touched an all-time high of 153.13 on Jan. 7 but dropped to a low of 113.01 on Feb. 3. Nvidia stock ended the regular session on Feb. 19 at 139.23.
For its fiscal Q4 ended Jan. 26, Nvidia is seen earning 84 cents a share on sales of $37.96 billion, according to the consensus of estimates tracked by FactSet. That would translate to year-over-year growth of 62% in earnings and 72% in revenue, a marked deceleration in growth. Nvidia has posted six straight quarters of triple-digit increases in earnings.
Nvidia Stock: Spotlight On Blackwell Chip
The Blackwell chip will be key to future performance. Nvidia stock will likely find support in the months ahead if major cloud-computing customers continue to indicate strong demand for the new AI chip.
Also, Nvidia will have the chance to tout its latest AI advancements, including its next-generation Rubin chip, at its GTC conference March 17 to 21 in San Jose, Calif. Nvidia Chief Executive Jensen Huang is giving a keynote speech at GTC on March 18.
Investors are increasingly concerned about demand for Nvidia graphics processing units, or GPUs, in the midterm and longer term.
That explains why Nvidia stock has fallen hard on periodic reports of hyperscale cloud-computing companies investing in their own custom AI chips or considering ways to lower their capital expenditures, like China's DeepSeek reportedly was able to do with its AI system.
Other concerns weighing on Nvidia stock include occasional reports of production issues with its current-generation Blackwell processors, new export controls on China, and possible tariff hikes.
What Is The Market Cap Of Nvidia Stock?
Santa Clara, Calif.-based Nvidia was the most valuable company by market capitalization for two brief periods in 2024. Today, Nvidia has a market cap of $3.4 trillion, only behind Apple with nearly $3.7 trillion.
The biggest overhang on Nvidia stock lately has been its major customers' work on custom AI chips, known as application-specific integrated circuits, or ASICs.
Nvidia's biggest customers are hyperscale cloud computing service providers, including Alphabet's Google, Amazon, Facebook parent Meta Platforms and Microsoft. And they're all making custom AI chips, usually partnering with Broadcom and Marvell Technology.
"Nobody wants to be too beholden to a single vendor," Newman said. "Certainly not these big companies."
Demand For Nvidia AI Chips
While the hyperscalers will use custom chips for some of their high-volume workloads, they'll still need substantial clusters of Nvidia GPUs to run AI training and inference, he said.
Gene Munster, managing partner at Deepwater Asset Management, concurs. "There's no substitute for Nvidia's bleeding-edge processors," he said. Nvidia is best positioned for when artificial intelligence shifts from generative AI to agentic AI and eventually artificial general intelligence (AGI).
The potential impact of ASICs on Nvidia's business has been exaggerated, Morgan Stanley analyst Joseph Moore said in a Feb. 12 client note.
"In the last six months, the momentum in the AI trade has clearly moved to custom silicon, as Nvidia has tread water and AMD has sharply underperformed," Moore said. "ASIC expectations have gone sky high, even though merchant (silicon) seems poised to outgrow ASICs in 2025."
Nvidia and Advanced Micro Devices are the primary makers of merchant AI GPUs.
Why Are Nvidia Chips Unique?
But Nvidia remains the AI platform of choice for hyperscale cloud customers, owing to its advanced silicon and hardware innovations, CUDA software ecosystem and legions of developers. Analysts say this has created a moat around its business.
Nvidia is five to 10 years ahead of anyone else in the AI chip market, Evercore ISI analyst Mark Lipacis said in a Feb. 9 client note.
The chipmaker also is on a one-year product upgrade cadence. Its Blackwell GPUs went into production in late 2024. They will be followed later this year by Blackwell Ultra processors and next year by Rubin.
Meanwhile, hyperscalers are ramping up their spending on AI data centers to meet the demand for AI applications and services.
Future Of Nvidia Stock
"The challenge for Nvidia is it's almost priced for perfection," Logan Purk, technology analyst for Edward Jones, told IBD. "The stock has run with the belief that it effectively dominates AI chip markets and AI spending is going to perpetually go up and to the right. So any cracks in the armor for either of those two arguments damages that bull thesis and causes anxiety among investors."
He added, "We're approaching the point where investors are wondering what the next act is."
Nvidia CEO Huang provided a look at what that next act might be in a keynote speech at CES 2025 on Jan. 6. In addition to data center advancements, he discussed the company's involvement with autonomous vehicles, humanoid robots and bringing AI to desktop computers.
"You can sense that Nvidia wants to start hedging after going all-in on data center," Futurum's Newman said. "CES was the moment when they came out and said, 'We're not just a data center company.'"
At the same time, Nvidia's data center business remains its main driver.
"As far as I can see, they're selling everything they can make and at a ridiculously high margin," Newman said. "And nobody has been able to penetrate the moat substantially."
Technical Analysis Of Nvidia Stock
But despite robust sales and near-term estimates bolstered by heavy capex investments by hyperscale cloud customers, Nvidia stock has struggled since it last breakout from a late-stage base on Oct. 17.
Nvidia stock has an ugly double-bottom base with a 148.97 buy point, according to IBD analysis. The pattern is ugly, but five straight tight closes are encouraging, and could offer a 143.44 handle buy point after Monday. Investors already could use 143.44 as a trendline buy point, though buying just before quarterly results is risky.
"Investors still have this concern about when the party is going to end," Deepwater's Munster said. "The real catalyst for the stock will be in their April quarter as data points trickle in about capex spending and new projects that are getting launched."
He added, "We're investors, but we're hunkering down thinking this is probably going to be a long ride to recovery."
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