Nvidia (NASDAQ: NVDA) recently saw a significant dip in its stock price due to concerns over the rise of Chinese AI company DeepSeek.
However, most of that loss has now been recovered. With Nvidia set to announce its Q4 earnings on Feb. 26, investors are wondering if it’s a good time to buy before the results are revealed.
Can Nvidia Stock Jump After Earnings?
Nvidia has a strong history of surpassing Wall Street’s earnings expectations, especially after the rise of AI-driven technologies like OpenAI’s ChatGPT. In fact, the stock has risen following six of the past nine earnings reports. However, there have been recent exceptions, so the future remains uncertain.
Analysts expect Nvidia to report Q4 revenue of $38.13 billion and earnings per share (EPS) of $0.85. To meet or beat these estimates, Nvidia needs to see significant year-over-year growth—about 72.5% in revenue and 63.5% in EPS.
Although Nvidia’s Q4 guidance was slightly lower at $37.5 billion, the company has the potential to surpass these expectations. There are a few reasons to be optimistic about Nvidia’s future performance.
Reasons to Be Optimistic
- High Demand for New GPUs: Nvidia’s CFO Colette Kress mentioned that demand for its new Blackwell GPU chips is “staggering.” Even with strong demand, the company is on track to exceed its previous revenue estimate for these chips.
- Ongoing AI Investment: Tech giants such as Amazon, Microsoft, Alphabet, and Meta are heavily investing in AI infrastructure, which bodes well for Nvidia’s growth.
- Nvidia’s Rival AMD Isn’t Gaining Ground: While Nvidia’s competitor Advanced Micro Devices (AMD) posted strong Q4 growth, it didn’t meet expectations. This suggests that Nvidia still has the upper hand in the AI chip market.
What About the Long-Term Outlook?
While there may be short-term volatility around the Feb. 26 earnings report, the long-term question is whether Nvidia’s momentum can continue. Some investors worry that the demand for AI chips will slow down, especially with newer, more efficient models like DeepSeek’s AI.
However, Nvidia’s track record of innovation and the continued growth of AI infrastructure suggest that demand for its chips could remain strong for the foreseeable future.
Nvidia’s valuation currently stands at 32.6 times forward earnings, which could be a concern for some investors. Despite this, Nvidia’s strong competitive position and ongoing AI growth present a solid case for long-term investment.
Should You Buy Nvidia Stock Now?
While there’s always uncertainty when buying stocks before earnings reports, Nvidia’s strong performance and growth prospects make it a compelling investment.
If you’re considering investing before Feb. 26, it could be a smart move, but remember that the long-term outlook is just as important as short-term gains.
