Nvidia (NVDA) will report its highly anticipated fourth quarter earnings after the bell on Wednesday. Analysts and investors will be focused on how much revenue the company generated via its powerful Blackwell line of chips — as well as insights into how the AI giant is navigating the looming threat of tariffs and the potential for further export controls on shipments of its processors to China.
Nvidia is the reigning champion of AI chips, and it’s not losing that crown anytime soon. Its chips are the envy of Silicon Valley and beyond, and its competitors are still far from overtaking its performance advantage. Big Tech companies Amazon (AMZN), Google (GOOG, GOOGL), Meta (META), and Microsoft (MSFT) are spending billions of dollars building out their AI data centers, and a chunk of that is going straight to Nvidia.
But the graphics processing behemoth is also staring down a number of challenges such as clients becoming rivals. Also, more efficient AI models like those developed by DeepSeek could push customers to purchase less expensive chips over time.
For the quarter, Wall Street is anticipating earnings per share (EPS) of $0.84 on revenue of $38.2 billion, according to consensus estimates via Bloomberg. That would represent a 63% increase in EPS and a 73% jump in revenue versus the same period last year. While any other company would gladly take that kind of growth, investors may see it as a letdown. After all, we’re talking about a business that saw EPS climb 486% and revenue soar 265% in Q4 last year.
Nvidia’s data center business is anticipated to generate the vast majority of its revenue in the quarter, topping out at $34 billion, while gaming is set to bring in $3 billion. The remainder of the company’s revenue will come from its professional visualization, automotive, and OEM segments.
Wall Street is watching. Shares of the company are flat year to date. Big Tech has struggled at the start of the year, with Google parent Alphabet (GOOG, GOOGL) off 5%, Amazon (AMZN) down 1%, Microsoft (MSFT) falling 3%, and Apple (AAPL) dropping 4%. Meta (META) is the sole outlier in the group, with shares up 14%.
This will be Nvidia’s first quarterly report since China’s DeepSeek sent shares of AI companies plummeting and erased $600 billion from Nvidia’s market cap in late January. At the time, investors feared that DeepSeek’s claims that it developed such a powerful model using below top-of-the-line Nvidia chips would be the end of the run on the company’s more powerful processors.
But during an interview with DDN CEO Alex Bouzari, Nvidia CEO Jensen Huang contended that the opposite was true. That’s because running models like DeepSeek’s on high-powered chips provides better results. According to Huang, DeepSeek’s models incentivize companies to spend more on top-of-the-line processors, rather than discouraging them from ponying up for the best of the best.
Nvidia is also facing the threat that President Trump will place tariffs on chips imported from Taiwan. Nvidia works with TSMC to build its processors, which produces many of those chips in Taiwan. Trump has also threatened to put further export restrictions on Nvidia chips destined for China, which would cut into the company’s revenue from the region.
Nvidia gets the bulk of its revenue from the US, from which the company raked in $14.8 billion of its $35 billion in sales in Q3. But China was the company’s third-largest market, bringing in $5.4 billion, behind Singapore, which generated $7.6 billion.
Wall Street has also raised concerns about the impact of Amazon, Google, Microsoft, and Meta using their own custom AI chips versus those developed by Nvidia. If those companies’ chips can match Nvidia’s in performance, the thinking goes, they’ll have no need to rely on Nvidia’s offerings.
Cloud service providers like Amazon, Google, and Microsoft account for 50% of Nvidia’s data center revenue in Q3. Any threat to that would have a significant impact on Nvidia’s bottom line.
But Morgan Stanley Research analyst Joseph Moore cautioned overreacting to the potential of these ASICS, or application-specific integrated circuits.
“Spending time with 20-25 NVIDIA alternatives over the years, most of which failed to get traction, we saw initial enthusiasm based on price and potential performance, which [brought] an initial deployment,” Moore wrote. “Then there is almost always a pull back to NVIDIA, which has the most mature ecosystem, and the alternatives are put on hold, sometimes never to return.”
Google and Amazon’s chips have proven to be the exception to that rule so far, but Moore says Nvidia is still gaining share in the AI space.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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