Nvidia Set to Report Q4 FY2025 Earnings: Here’s What the Stock Market is Watching

TradingKeyFeb 25, 2025 8:58 AM

TradingKkey - The US stock market has been on edge recently as the S&P 500 Index tumbled 1.7% last Friday while tech stocks took a further hit on Monday. With weaker-than-expected consumer data coming through last week, questions are being raised about how much longer this stock market rally can continue.

One of the big tests will come this week, when the Artificial Intelligence (AI) chip giant Nvidia Corp (NASDAQ: NVDA) reports its Q4 FY2025 results (for the three months ending 26 January 2025). Nvidia is set to report its latest numbers on Wednesday (26 February) after the market closes.

With Nvidia stock actually down 5.8% so far in 2025, and trailing the S&P 500 Index’s 2.0% gain in the same period, investors will be closely watching the semiconductor firm’s earnings to see its impact on the overall sentiment for the stock market.

So, ahead of Nvidia’s latest earnings, here’s a quick breakdown of what the stock market is going to be focusing on.

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Will constraints on Blackwell chip supply ease?

First off, the market’s consensus expectation is looking for Nvidia to post US$38 billion in revenue for the period, which would represent 72% year-on-year revenue growth. Meanwhile, Nvidia’s own guidance for this quarter (Q4 FY2025) – which it shared back in November – is for revenue of US$37.5 billion.

For context, Nvidia posted revenue of US$35.1 billion in its Q3 FY2025 quarter – representing a whopping 94% year-on-year growth. Understandably, off a bigger base, this revenue growth (in percentage terms) is starting to slow.

Yet there could well be an upside surprise on Wednesday if news about Nvidia’s latest AI GPU chip is positive. Named “Blackwell”, demand for Nvidia’s next-gen AI GPU has been red-hot. Indeed, Nvidia CEO Jensen Huang described demand for Blackwell as “insane” back in October 2024.

But despite the demand clearly being there, Nvidia’s last earnings report disappointed as the supply of Blackwell was constrained on the manufacturing side. This limited the output of the Blackwell chip in Q3 FY2025 but CEO Huang did also say that the Blackwell chip would impact gross margins (negatively) for Q4 FY2025.

Of course, investors will be keen to see what that means on Wednesday as gross margin is expected to fall by two percentage points (from 75% to 73%) on the ramp-up of the Blackwell chip.

Will DeepSeek impact capital spending?

One of the big worries for investors is going to be the monster amounts of capital that the cloud giants are spending on building out infrastructure that’s related to Artificial Intelligence (AI).

Companies like Microsoft Corporation (NASDAQ: MSFT) and Meta Platforms Inc (NASDAQ: META) have been ramping up capital expenditure into the tens of billions of dollars for 2025 and beyond.

A lot of this has involved spending more on advanced AI chips – that Nvidia designs – as well as the construction of data centres. However, with the news from China-based DeepSeek that it had created an AI model that required much less computing power and money to run, there are obvious concerns that spending by these American cloud and AI giants will dip.

At the centre of this AI ecosystem is Nvidia and its Blackwell chips, given how the company dominates with around 90% market share in cutting-edge AI chips. Investors will be keen to see what Nvidia says about the demand it’s seeing for its chips in the wake of the DeepSeek news.

What’s the expected move in Nvidia shares post-earnings?

For investors, earnings releases typically produce a big reaction in share prices for the companies involved. This week, that will be particularly true for Nvidia.

In terms of expectations, as of last Friday, options traders in the stock market are expecting a move up or down of around 7.7% in Nvidia shares following its earnings release. That compares against an average gain/loss of 9.2% over the previous eight quarterly reports.

Whatever happens on Wednesday, investors will get more clarity on the company’s near-term prospects. More importantly, though, the tone of Nvidia’s earnings will also impact the wider tech and AI stock market in terms of related names.

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