Nvidia faces investor scrutiny ahead of its earnings report on February 26, following a recent market stumble triggered by the unveiling of a lower-cost AI model by Chinese startup DeepSeek. This development caused Nvidia’s shares to drop by roughly 17% on January 27, resulting in a record one-day market value loss of $593 billion. Although shares have nearly recovered, concerns persist about potential market turbulence if earnings disappoint. Mike Smith, head of growth equity at Allspring, noted investor anxiety about calling the top on Nvidia, suggesting possible rotations into sectors like healthcare, software, and financials. Nvidia options imply a 7.7% share price swing post-results, consistent with historical averages. Nvidia is projected to report a fourth-quarter profit of $20.89 billion, driven by a 72% revenue increase from the previous year. Investors will focus on guidance regarding chip supply and demand to justify Nvidia’s valuation, which recently stood at about 32 times forward 12-month earnings estimates, down from 40 in early November. Matt Orton, chief market strategist at Raymond James Investment Management, highlighted Nvidia’s role in resetting investor sentiment amid uncertainties around U.S. tariff and fiscal policies, retail sales, and inflation data. Despite Nvidia’s diminished influence on broader market movements, a disappointing report could still impact stocks. Investors will also monitor upcoming U.S. inflation data, as hotter-than-expected figures might delay Federal Reserve interest rate cuts. — news from Reuters
