Investors have been closely watching the Nvidia (NVDA +2.71%) story throughout this artificial intelligence (AI) boom. And for good reason. The company is the leading designer of graphics processing units (GPUs), the key chip used for the most crucial of AI tasks like the training and inferencing of models.
This has helped Nvidia deliver double- and triple-digit revenue growth quarter after quarter to record levels in recent years and reach other important milestones. For example, the prestigious Dow Jones Industrial Average invited Nvidia to join last year -- and the stock ended up delivering the best performance of all of the stocks in the benchmark in 2024.
Considering all of this, it's logical that investors eagerly listen to every word Nvidia executives say during the company's reports and presentations. And now, one of these major moments is just days away. In fact, I predict that Feb. 26 -- when Nvidia reports fourth-quarter and fiscal 2025 earnings -- will be the most important day yet for Nvidia stock. And here's why.
Image source: Getty Images.
Nvidia's ecosystem of AI
First, let's talk a bit about the Nvidia story so far. As mentioned, the company has become the AI chip leader, holding about 80% of the market. But Nvidia's AI work doesn't stop here. This market giant has built an entire ecosystem of AI products and services from software to networking -- and even has created platforms tailored to the needs of specific industries like healthcare and autonomous vehicles. Nvidia recently announced blueprints that integrate with Nvidia Enterprise software to help customers create AI "agents." So Nvidia is setting itself up to benefit from this next wave of AI growth as the technology is applied to real-world problems.
Now, let's consider the importance of Feb. 26. Nvidia will report earnings as it does every quarter, but this particular report could be a crucial one for the company because the quarter includes the launch of Nvidia's most powerful AI architecture yet, Blackwell. And since innovation is the element that could keep Nvidia ahead of rivals, it will be very important to hear about how the Blackwell launch unfolded -- and how this impacted the earnings picture.
NASDAQ: NVDA
Key Data Points
"Staggering" demand for Blackwell
During the previous quarterly report, as the fourth-quarter was just beginning, Nvidia said Blackwell demand was "staggering," and that follows earlier comments from the company about demand surpassing supply. In fact, Nvidia even said that it expected to bring in several billion dollars of revenue from Blackwell in this very first quarter of commercialization.
And comments about profitability also were positive. Blackwell is a complex product to launch due to the fact that it's greatly customizable, and that means it will result in an increase in costs -- but Nvidia still expects gross margin to surpass 70%. This is an incredibly high level of profitability for a company heavily investing in growth.
So, now, investors will be focused on whether Nvidia's Blackwell launch unfolded as planned. If it did, or even surprised in a positive way, this could be a very positive sign for Nvidia not only now but for the long term. It would show that the company can deliver on its promises to innovate, and that these innovations have what it takes to supercharge growth.
Is Feb. 26 a make-or-break moment for Nvidia?
Does this mean Feb. 26 is a make-or-break moment for Nvidia? Not necessarily. It's important to keep in mind that, though investors want to see a near-perfect product launch from Nvidia, any potential stumbling blocks wouldn't change this AI leader's long-term growth story or its ability to stay ahead of rivals due to its focus on innovation. So, if the launch weighs a bit more on gross margin than expected, for example, it wouldn't spell disaster for Nvidia.
Though every quarter is important, what's truly crucial is performance over a number of quarters. So far Nvidia has delivered excellent long-term performance, and that means investors shouldn't focus too much on short periods and should instead look at the big picture.
But, considering the company's comments in recent times, I'm optimistic about Feb. 26. And thanks to the Blackwell rollout, I think this day could be the most important one yet for Nvidia -- and potentially send the stock soaring.
