NVDA stock climbs 3% ahead of earnings: what to expect

Nvidia shares were in the green on Wednesday morning. The NVDA stock climbed up sharply after market open, going up over 3% to hit an intraday high of $131.60.

The chip giant is set to report its fourth-quarter financial results on Wednesday after the bell, capping off what could be one of the most remarkable years for the company.

Nvidia Q4 earnings: what to expect

Analysts polled by FactSet expect the company to post around $38 billion in sales for the January quarter—a 72% increase on an annual basis.

Net income is expected to reach $21.08 billion, up from $12.84 billion a year ago. For the quarter, Wall Street anticipates earnings per share (EPS) of $0.84.

Investors will also closely monitor Nvidia's guidance, with analysts projecting nearly $42 billion in revenue for the upcoming quarter.

Updates on the Blackwell platform’s production ramp will also be a key focus.

This strong performance marks the second consecutive fiscal year in which Nvidia’s sales have more than doubled.

Nvidia has built a strong reputation for exceeding earnings expectations, having outperformed estimates in 16 of the past 18 quarters, according to Nasdaq's analysis.

In Q3, the company reported $35.1 billion in revenue, reflecting a 94% year-over-year increase. In Q2, Nvidia recorded $30.0 billion in revenue, marking a 122% rise from the previous year.

Over the past two years, Nvidia’s stock has surged 478%. The golden run in the NVDA stock has also seen the AI behemoth become the highest valued company in the world for brief periods.

Nvidia's worries

Despite the record-breaking growth, Nvidia’s stock has plateaued recently.

Trading at levels similar to those seen last October, investors are growing cautious about the company’s future, especially as signs emerge that some of its largest customers might be reducing capital expenditures.

The stock is off to a slow start to 2025. On a year-to-date basis, the NVDA stock has dropped around 5%.

Much of Nvidia’s revenue comes from a small group of companies that operate massive server farms—commonly known as hyperscalers—whose spending decisions have a significant impact on the chip giant.

Last February, Nvidia disclosed that a single customer contributed 19% of its total revenue in fiscal 2024. With such concentration, any pullback by major clients could disrupt Nvidia’s momentum.

Another challenge for Nvidia emerged last month with the debut of DeepSeek, a Chinese startup that introduced an efficient “distilled” AI model.

The performance of DeepSeek’s R1 model raised questions about whether the massive investments in Nvidia GPUs are always necessary for cutting-edge AI development, causing Nvidia’s market cap to temporarily drop by almost $600 billion.

However, CEO Jensen Huang remains optimistic. He explained in a pretaped interview that rather than diminishing demand, the new developments underscore the need for even more GPU capacity—particularly for AI inference tasks, where deploying models at scale requires extensive compute resources.

Huang cited the “scaling law” from OpenAI, emphasizing that increased data and compute usage continue to drive AI improvements, ensuring sustained demand for Nvidia’s technology.