The Nvidia Corp. (NASDAQ: NVDA | NVDA Price Prediction) earnings announcement this week may be the most important release of the first quarter of this year. It will determine not only the fate of Nvidia’s share price. Because of its leadership in artificial intelligence chips, the results will hit AI software leaders Microsoft, Alphabet, Amazon, Oracle, and dozens of others. The last time Nvidia faced bad news, its stock declined 17%, which wiped out $600 billion of market value.
Nvidia stock tumbled on January 27, when Chinese AI product DeepSeek became available to U.S. users. Even Nvidia said it was competitive. It called DeepSeek an “excellent AI advancement.” The reason that Nvidia’s stock was hit so hard was because DeekSeek’s creators said they did not need powerful chips to build their product. Its training only cost $6 million, a tiny fraction of the cost for competing products created in the United States. Later, it turned out the claim may not have been true.
Wall Street expects Nvidia’s revenue to be at least as strong as the company’s guidance, which was $37.5 billion. In the previous quarter, it was $35.1 billion, which was up 94% from the same quarter the year before. Among the 42 analysts who cover the stock, the average estimate for the quarter about to be announced is $38.2 billion.
The most recent news about how large tech companies view AI may be a possible decision by Microsoft to cut its expenditures in AI data center leases. BT Business Today reported, “Microsoft has reportedly cancelled several U.S. data center leases amounting to hundreds of megawatts (MW) and has pulled back on converting Statements of Qualification (SOQ) into signed leases, according to an industry update by TD Cowen.”
Megacap tech companies have announced AI investments totaling into the hundreds of billions of dollars. Any pullback should show up in Nvidia’s guidance, and any weakness will cause another collapse in its shares. The result could be worse than those brought on by DeepSeek.
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