- Nvidia’s (NVDA) Wednesday earnings face scrutiny as DeepSeek’s low-cost AI models, slashing $593 billion from its market cap in January, challenge the need for its pricey chips, despite a projected $38.05 billion Q4 revenue (up 72%) and 60% Q1 forecast.
- Big tech’s persistent spending – Meta (META), Microsoft (MSFT), Google (GOOG), Amazon (AMZN) – bolsters Nvidia’s demand, per Gabelli’s John Belton, though the Blackwell rollout cuts margins to 73.5% amid a complex shift to full AI systems like GB200 NVL72.
- Investors, wary after DeepSeek’s rise, await Nvidia’s ability to “beat and raise,” as Spear Invest’s Ivana Delevska notes, with Blackwell’s production hurdles testing if the $3.3 trillion titan can sustain its AI dominance.
Nvidia (NVDA) stands at a crossroads as its Wednesday earnings loom large, with the $3.3 trillion chip titan – second only to Apple (AAPL) in global value – facing a crucible of investor doubt sparked by China’s DeepSeek, whose low-cost AI models slashed Nvidia’s market cap by ‘only’ $593 billion in January, the steepest one-day drop for any U.S. firm. That jolt, though largely recovered, lingers as a specter over the AI chip kingpin, which has ridden a two-year spending spree by tech giants like Microsoft and Meta to dizzying heights – its shares among 2023 and 2024’s elite performers – yet now confronts whispers that its pricey GPUs might not be the only path to AI supremacy. Ivana Delevska of Spear Invest, speaking to Reuters, captures the tension: “Investors have been very concerned about DeepSeek and the impact that it will have on demand,” pinning hopes on Nvidia’s ability to “beat and raise” with a projected $38.05 billion Q4 revenue surge (up 72%) – a slowdown from five triple-digit growth quarters – and a 60% Q1 forecast.
DeepSeek’s pitch – rivaling ChatGPT or Google’s Gemini with cheaper, less-restricted silicon – has rattled the industry, questioning the necessity of Nvidia’s high-octane chips, yet John Belton of Gabelli Funds points to unwavering CapEx from Meta (META), Microsoft (MSFT), Google (GOOG), and Amazon (AMZN) as a “very positive picture” for near-term demand, buttressing Nvidia’s case amid a Blackwell rollout that’s juicing revenue but pinching margins to 73.5%, down over three points. The Blackwell shift to full systems like the GB200 NVL72 – bundling GPUs, CPUs, and networking gear – has stumbled through a tricky ramp-up, with TSMC (TSM) racing to expand advanced packaging capacity against design flaws and low yields, now resolved, promising billions in Q4 sales beyond initial forecasts. Belton cautions, however, that “Blackwell has been a complicated set of products to launch,” hinting that Nvidia’s usual outperformance might taper as it navigates these dynamics, leaving Wednesday’s report a high-stakes test of whether its tech throne endures or wobbles under DeepSeek’s shadow.
WallStreetPit does not provide investment advice. All rights reserved.
Leave a Reply