Nvidia (NVDA +0.10%) has become one of the most-watched stocks on the planet in recent years. That's because the company has built an empire in the key growth industry of today and tomorrow: artificial intelligence (AI). The current $200 billion AI market is forecast to reach beyond $1 trillion by the end of the decade, signaling enormous opportunity for companies that get in early and secure their dominance.
And Nvidia has done just that, taking about an 80% share of the AI chip market and expanding into many other related products and services to offer customers an entire ecosystem of AI. The company already is reaping the rewards, generating revenue growth in the double or triple digits quarter after quarter -- and delivering strong profitability on sales.
A company's earnings reports always are extremely important moments, offering investors the latest look at business trends, and of course, financial performance. And Nvidia has one of these big moments coming up, on Feb. 26 when it reports fiscal fourth-quarter 2025 earnings.
Here are my top three predictions ahead of this much-awaited report.
Image source: Getty Images.
1. Nvidia will beat earnings expectations -- again
This quarter may not be the easiest time to score an earnings beat, and for one big reason: Nvidia is in the middle of launching a major new product, its Blackwell architecture. This product is customizable, with seven different chips, various networking options, and more -- and all this means the rollout is complex and could involve extra costs that weigh on margins.
Nvidia even said its gross margin, recently in the mid-70% range, will narrow to the low-70% during the period.
But even in this context, I think Nvidia may continue its record of surpassing expectations, as it's done for at least the past four consecutive quarters. During those periods, it's surpassed earnings-per-share forecasts by 5.6% to more than 11%. This is driven not only by the demand for Nvidia's AI products, but also by the company's ability to manage its costs and work efficiently.
And this ability should help Nvidia maximize the benefits of the Blackwell launch -- for example, turning orders into revenue growth -- while minimizing the negative impact. In its latest earnings call, Nvidia already increased its forecast for Blackwell revenue in this quarter to be reported on Feb. 26.
The average analyst estimate calls for Nvidia to report EPS of about $0.84 for the fourth quarter, and in its most recent report, Nvidia predicted revenue of $37.5 billion. But I wouldn't be surprised if Nvidia went to the upside across both measures.
2. The company will dispel worries about the DeepSeek news
Nvidia stock recently dropped after Chinese start-up DeepSeek announced it had trained its model with an astonishingly low investment in compute. Investors sold off Nvidia stock on worries that other tech companies would follow DeepSeek and decrease their investment in graphics processing units (GPUs) for training.
(Since, experts have questioned the DeepSeek numbers -- and consulting firm SemiAnalysis even wrote a report saying DeepSeek likely invested $500 million in GPUs, a far cry from the company's announcement of less than $6 million.)
However, whether DeepSeek's numbers are accurate or not, the news gave Nvidia the opportunity to emphasize the importance of high-powered GPUs in inference, the reasoning a model must do to actually apply AI to the real world and solve problems. The point is, once models are trained, Nvidia's premium GPUs are needed to power them through their tasks.
"Inference requires significant numbers of Nvidia GPUs and high-performance networking," Nvidia said in response to the DeepSeek news, suggesting the world now will need more and more of these high-powered chips.
I predict that during the upcoming earnings report, Nvidia will dispel worries about the DeepSeek news and talk about how inferencing will become a key growth driver in the coming quarters.
NASDAQ: NVDA
Key Data Points
3. The stock may soar following the report
Nvidia stock has declined following that initial DeepSeek news, and it's suffered from general uncertainty regarding President Trump's tariffs and policy on chip exports to China. Though I don't think the DeepSeek achievement represents a threat, it's still too early to determine exactly how government policies will impact the tech giant.
Still, it's unlikely that government decisions will sink Nvidia. The company is a worldwide leader with a solid moat, high profitability, and the innovation to keep the success story going. So even if certain decisions weigh on revenue growth, I wouldn't expect this to reach extreme proportions.
That means today, trading for 27x forward earnings estimates, Nvidia looks incredibly cheap. As investors look at this valuation, and consider this along with potentially good news in the earnings report, they may see this as the perfect moment to hop on board, sending Nvidia stock soaring again.
