The most anticipated earnings report of the quarter is just around the corner. Nvidia is set to announce its earnings report on the 26th of February, with many expecting an earnings beat on both the top line and the bottom line. We still don’t know if there will be any substantial impact from the delay in the Blackwell line of GPUs and whether the company has started shipping it out at scale. However, there are now fears that the product may not be as in demand as initially expected.
TD Cowen came out with an analyst note stating Microsoft has canceled data center leaders with at least two operators and is scaling back international spending. This is going to spook investors as the company was expected to be the biggest AI infrastructure spender in 2025. The fact that Microsoft was Nvidia’s largest customer in terms of GPUs bought in 2024 means the development is significant. Even if it doesn’t immediately impact the Nvidia earnings, it will dampen the optimism heading into the earnings and possibly result in EPS revisions, especially if the Nvidia earnings surprise to the downside.
The Windows software maker has also walked away from multiple data center deals while letting over 1 gigawatt worth of deals expire. This could all of course be just business as usual and small delays instead of outright cancellation. Microsoft was quick to clarify that the company’s plans of spending $80 billion in 2025 are still on. This would settle some nerves among investors but the fear has already set in and may creep into Nvidia’s earnings lead-up.
Nvidia is expected to post an EPS of $0.85 on revenue of just over $38 billion. While future GPU demand isn’t a concern for now, there are question marks over the company’s ability to deliver Blackwell GPUs in time. KeyBanc analysts are confident of the company’s ability to get over these issues and deliver strong earnings and guidance:
Despite prior concerns regarding constraints associated with the ramp of GB200 NVL servers, we expect NVDA to report strong F4Q results, which we anticipate will solidly beat, and to guide F1Q conservatively and moderately higher than consensus.
Some customers have increased their orders of H20 GPUs while they wait for the company to resolve the Blackwell GPU execution issues. If that’s the case, the company may be able to withstand any negative effects of the delay and report both a strong quarter and a strong guidance.
Nvidia is 5th on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 223 hedge fund portfolios held NVDA at the end of the fourth quarter which was 193 in the previous quarter. While we acknowledge the potential of NVDA as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
