Nvidia Earnings Preview: Can NVDA Revive the AI Trade?

Nvidia Earnings Key Points

• Analysts expect Nvidia to report $1.52 in EPS on $65.6B in revenue, but as always, the company’s guidance for future quarters will be most significant.
• Traders will focus first on guidance, then the Blackwell production ramp, and lastly on gross margins.
• After a prolonged 6-month consolidation below $200, this earnings report could finally break the stalemate between bulls and bears.

When are Nvidia’s Earnings?

Nvidia reports earnings on Wednesday, February 25 after the market close.

What are Nvidia’s Earnings Expectations

Analysts expect Nvidia to report $1.52 in EPS on $65.6B in revenue.

Nvidia Earnings Preview

Over the last couple of years, traders have learned that backward-looking earnings and revenues are decreasingly important; instead, the primary trading catalysts around earnings reports are guidance and the performance of key growth divisions, and that dynamic is perhaps more relevant for Nvidia (NVDA) than any other stock.

As the standard bearer for the AI trade, Nvidia has established a reputation for beating analyst expectations, leading to a “whisper number” that tends to come in above analysts’ widely-publicized earnings and guidance expectations. Put simply, “meeting” earnings expectations is unlikely to be enough to drive the stock higher, especially if conservative guidance reinforces some traders’ fears that demand for AI capex may be downshifting.

Nvidia’s most recent quarter underscored the importance of the company’s data center business, so expect traders to focus there first. Specifically, the market will key in on the diversity of data center demand. If management indicates its data center growth as broad-based (i.e. hyperscalers, enterprise, sovereign AI), the stock is likely to react more positively than if data center gains are concentrated in a narrow set of mega-buyers. This logically spills into expectations for future data center activity, with any hints about optimization, digestion, or “more normalized” pacing likely to weigh on the stock.

Another key topic will be the ongoing ramp up of its top-of-the-line Blackwell chips. With essentially unlimited demand for the latest generation of semiconductors, the focus will be on production and shipments relative to expectations, as well as any allusions to longer deliver lead times.

Finally, Nvidia’s gross margins will be closely scrutinized. Traders should watch whether management speaks about any margin pressure as transitory (near-term pressure that improves as volume ramps) or structural (a new, lower range). In the current setup, a quarter can beat expectations and still get sold if the margin outlook reads as even slightly less pristine than the market wants.

If you’re trading Nvidia’s earnings, don’t assume that “beating” earnings expectations will be enough to drive the stock higher. Instead, NVDA is likely to react first to guidance, then to any comments about the progress of a Blackwell production ramp, and then to any changes to the company’s gross margin trajectory. After essentially six months of sideways price action below $200, the historically high bar to a strong earnings reaction may be lowered slightly, but it could still take a strong report across the board to wake NVDA stock from its recent paralysis.

Per options pricing, traders are expecting a +/- 5.5% move in NVDA stock on the release, down somewhat from the +/- 10% earnings moves that we saw throughout much of last year, but still a significant event risk for broader indices and risk sentiment given the stock’s staggering $4.7B market capitalization.

Nvidia Technical Analysis: NVDA Daily Chart

Source: Tradingview, StoneX

From a technical perspective, NVDA has spent over six months consolidating in a tight range between about $170 and $195, albeit with a brief foray above $200 in early November. Bulls argue that this extended pause has allowed the stock to digest its previous surge, correcting through time rather than price, while bears contend that the stock is in the midst of a long-term topping pattern, making this quarter’s earnings report a possible “tiebreaker” to the stalemate.

A strong report that reiterates ongoing growth could take NVDA out of its sideways range and even retest the record highs near $210, while a more cautious outlook would strengthen the case for a downshift in AI capex and likely take NVDA back toward its 200-day MA near $180. From a longer-term perspective, only a break below support in the $170 range would erase the bullish bias and hint at a deeper pullback to the mid-$100s.  

-- Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX