Nvidia Earnings Report Becomes Critical Test for AI Market Amid Rising Competitive Pressures

Nvidia results are AI market's biggest test amid competitive worries

Feb 24 (Reuters) - As Nvidia (NVDA.O), opens new tab heads into quarterly earnings on Wednesday, AI investors are seeking evidence that the chipmaker's profits are growing apace on the back of a $630 billion capital spending budget from Big Tech. But signs of risk to Nvidia's long-held dominance are also emerging from hyperscalers' plans to design their own cheaper AI chips. After powering much of the U.S. stock market rally for the past three years, Nvidia's stock has risen just about 2% so far in 2026. Along with Advanced Micro Devices, which is set to unveil a new flagship AI server later this year, Alphabet's (GOOGL.O), opens new tab Google has emerged as a top rival with a deal to provide Claude chatbot creator Anthropic with its in-house chips called TPUs. Google is also in talks to supply Meta (META.O), opens new tab - a large Nvidia customer, according to media reports. To defend its position, Nvidia struck a deal, reportedly worth $20 billion, last year to license chip technology from Groq - a move that analysts say would boost its position in the booming market for inference, the process by which a trained AI model answer questions in real time. Nvidia last week also agreed to sell millions of chips to Meta, though it did not disclose the value of the deal. But Nvidia, the biggest winner of the AI boom, has itself stoked doubts about whether the spending is sustainable by drawing out the process of a potential $100 billion investment in OpenAI, one of its biggest customers. A recent media report said it plans to replace that commitment with a smaller $30 billion investment. "This earnings in particular is important because people are so concerned about AI spending - whether we're in a bubble," said Ivana Delevska, chief investment officer of Spear Invest, which holds the company's shares in an exchange-traded fund. "Showing that earnings are not really decelerating will be pretty important." Wall Street expects Nvidia to report that profit in the quarter ended January surged more than 62%, according to data compiled by LSEG, a slowdown from 65.3% growth in the previous quarter as it faces tougher comparisons with its previous earnings. Revenue likely jumped more than 68% to $66.16 billion. Analysts expect Nvidia to forecast that first quarter revenue will grow another 64.4% to $72.46 billion. The company has surpassed sales expectations for the past 13 quarters, though that delta has shrunk. RBC analysts expect the company to forecast April quarter revenue at least 3% above estimates. Spear Invest's Delevska, an Nvidia bull, sees the company forecasting sales as much as $10 billion above estimates, expecting it to surpass market estimates by more than 13%. STILL NO. 1 Analysts are still expecting demand for Nvidia's pricey chips, which act as the "brains" of servers processing huge AI workloads to remain robust, and garner most of Big Tech's massive spending to expand AI data center capacity this year. Nvidia's executives also hinted in January that they were discussing data center orders for next year with customers, leading several analysts to forecast the company would update a $500 billion order backlog figure it first offered in October. The biggest constraint on Nvidia's growth, though, could be supply chain bottlenecks that limit the speed of AI chip shipments as Nvidia and rivals are vying for space on contract chipmaker TSMC's (2330.TW), opens new tab 3-nanometer assembly lines. "We think Nvidia will meet expectations, but it is hard to see them delivering much upside in light of TSMC capacity," Jay Goldberg of Seaport Research Partners wrote in a note. But the potential return of Nvidia's AI chip sales to China - earlier restricted due to export curbs placed by the U.S. government - could help bump up sales. CEO Jensen Huang said last month he hopes China will allow the company to sell its powerful H200 AI chip in the country and that the license is being finalised. Rival AMD (AMD.O), opens new tab added sales of AI chips back to its forecast for the current quarter after it received licenses to ship some of its modified processors to China. Nvidia is expected to record adjusted gross margin of 75% in the fourth quarter, an increase of more than one percentage point from the year-ago period. Analysts don't expect the company to hurt from the global memory supply shortage. Nvidia's pricing power and the likelihood of it already having locked in high-bandwidth memory allocations for the year would cushion it from the impact of rising memory prices, they said. Reporting by Arsheeya Bajwa and Aditya Soni in Bengaluru; Editing by Sayantani Ghosh Our Standards: The Thomson Reuters Trust Principles., opens new tab

Nvidia's Q4 results could make or break confidence in the AI hardware market

Nvidia has become shorthand for the AI market itself. In the years since generative models reshaped computing, the company's GPUs have powered everything from large-scale training clusters to real-time inference infrastructure. That dominance helped Nvidia's stock surge over 1,500 percent from 2022 into 2025 and made it one of the most valuable tech firms in history. Yet as its newest earnings report approaches, investors aren't just asking whether revenue is growing, they're asking whether the AI boom still has room to run. Analysts expect Nvidia to post another blockbuster quarter, with revenue forecasts between roughly $65 billion and $66 billion and adjusted gross margins near 75 percent. That kind of performance would mark continued strength in demand for high-end AI accelerators, particularly from cloud providers and hyperscalers that underpin much of the industry's infrastructure. On the surface, those numbers look almost routine at this point, after all, Nvidia has beaten estimates for revenue and earnings for more than a dozen straight quarters. But markets have shifted, and so has investor psychology. The question now isn't just "how much growth?", but "for how long?" and "toward what?" One reason for that shift is the growing push by major AI users to develop or adopt alternatives to Nvidia's hardware. Meta, Google and other hyperscalers are investing heavily in custom silicon or alternative accelerators designed to cut costs, optimize specific workloads, or gain strategic independence from Nvidia's ecosystem. Those moves don't immediately undercut Nvidia's sales, but they signal a longer-term competitive environment that didn't exist a few years ago. This isn't entirely new, the chip industry has always been cyclic and competitive, but it matters more now because so much of global AI infrastructure hangs off a single architecture. When customers start hedging that exposure, it naturally ripples through valuations and strategic forecasts. Another reason this earnings cycle feels different is the backdrop in broader markets. AI names have led the rally in tech stocks, but sentiment has softened. Over the first weeks of 2026, Nvidia's share price has barely budged compared with steep gains in previous years, even as other industries waver under economic uncertainty. Some analysts read this as a sign that markets are increasingly focused on profitability timelines and real-world deployment metrics rather than narrative alone. Part of that recalibration reflects broader anxiety about what some observers call an "AI bubble," where valuations in the sector may be disconnected from underlying economic fundamentals. Whether or not that label is fair, it reflects genuine investor nervousness about sustainability, return on investment, and how soon large companies will convert AI hype into consistent revenue growth. For Nvidia, this means earnings won't be judged simply on topline figures. The market will be listening closely to a few specific signals: A strong earnings beat with confident guidance could reassure markets that AI spending isn't slowing and that Nvidia remains the core engine of that demand. A modest beat or mixed signals, however, might validate some of the more cautious narratives and lead to broader tech sell-offs. Nvidia's report matters because it has become the default bellwether for AI infrastructure spending, and by extension, for how investors value growth in technology sectors. If the company shows that demand and pricing power remain robust, it supports a broader bull case for AI adoption. If not, we may see a re-rating of AI as an investment theme, with implications far beyond one company's earnings call. In that sense, this quarter isn't just about chips or quarterly revenue. It's about confidence: in AI's staying power, in enterprise capex cycles, and in the narrative that has driven one of the most remarkable growth stories in recent market history.

Nvidia results are AI market's biggest test amid competitive worries

As Nvidia heads into quarterly earnings on Wednesday, AI investors are seeking evidence that the chipmaker's profits are growing apace on the back of a US$630 billion capital spending budget from Big Tech. But signs of risk to Nvidia's long-held dominance are also emerging from hyperscalers' plans to design their own cheaper AI chips. After powering much of the U.S. stock market rally for the past three years, Nvidia's stock has risen just about two per cent so far in 2026. Along with Advanced Micro Devices, which is set to unveil a new flagship AI server later this year, Alphabet's Google has emerged as a top rival with a deal to provide Claude chatbot creator Anthropic with its in-house chips called TPUs. Google is also in talks to supply Meta - a large Nvidia customer, according to media reports. To defend its position, Nvidia struck a deal, reportedly worth $20 billion, last year to license chip technology from Groq - a move that analysts say would boost its position in the booming market for inference, the process by which a trained AI model answer questions in real time. Nvidia last week also agreed to sell millions of chips to Meta, though it did not disclose the value of the deal. But Nvidia, the biggest winner of the AI boom, has itself stoked doubts about whether the spending is sustainable by drawing out the process of a potential $100 billion investment in OpenAI, one of its biggest customers. A recent media report said it plans to replace that commitment with a smaller $30 billion investment. "This earnings in particular is important because people are so concerned about AI spending - whether we're in a bubble," said Ivana Delevska, chief investment officer of Spear Invest, which holds the company's shares in an exchange-traded fund. "Showing that earnings are not really decelerating will be pretty important." Wall Street expects Nvidia to report that profit in the quarter ended January surged more than 62 per cent, according to data compiled by LSEG, a slowdown from 65.3 per cent growth in the previous quarter as it faces tougher comparisons with its previous earnings. Revenue likely jumped more than 68 per cent to $66.16 billion. Analysts expect Nvidia to forecast that first quarter revenue will grow another 64.4 per cent to $72.46 billion. The company has surpassed sales expectations for the past 13 quarters, though that delta has shrunk. RBC analysts expect the company to forecast April quarter revenue at least three per cent above estimates. Spear Invest's Delevska, an Nvidia bull, sees the company forecasting sales as much as $10 billion above estimates, expecting it to surpass market estimates by more than 13 per cent. Analysts are still expecting demand for Nvidia's pricey chips, which act as the "brains" of servers processing huge AI workloads to remain robust, and garner most of Big Tech's massive spending to expand AI data center capacity this year. Nvidia's executives also hinted in January that they were discussing data center orders for next year with customers, leading several analysts to forecast the company would update a $500 billion order backlog figure it first offered in October. The biggest constraint on Nvidia's growth, though, could be supply chain bottlenecks that limit the speed of AI chip shipments as Nvidia and rivals are vying for space on contract chipmaker TSMC's 2330.TW 3-nanometer assembly lines. "We think Nvidia will meet expectations, but it is hard to see them delivering much upside in light of TSMC capacity," Jay Goldberg of Seaport Research Partners wrote in a note. But the potential return of Nvidia's AI chip sales to China - earlier restricted due to export curbs placed by the U.S. government - could help bump up sales. CEO Jensen Huang said last month he hopes China will allow the company to sell its powerful H200 AI chip in the country and that the license is being finalized. Rival AMD added sales of AI chips back to its forecast for the current quarter after it received licenses to ship some of its modified processors to China. Nvidia is expected to record adjusted gross margin of 75 per cent in the fourth quarter, an increase of more than one percentage point from the year-ago period. Analysts don't expect the company to hurt from the global memory supply shortage. Nvidia's pricing power and the likelihood of it already having locked in high-bandwidth memory allocations for the year would cushion it from the impact of rising memory prices, they said.

Nvidia results are AI market's biggest test amid competitive worries

Feb 24 (Reuters) - As Nvidia heads into quarterly earnings on Wednesday, AI investors are seeking evidence that the chipmaker's profits are growing apace on the back of a $630 billion capital spending budget from Big Tech. But signs of risk to Nvidia's long-held dominance are also emerging from hyperscalers' plans to design their own cheaper AI chips. After powering much of the U.S. stock market rally for the past three years, Nvidia's stock has risen just about 2% so far in 2026. Along with Advanced Micro Devices, which is set to unveil a new flagship AI server later this year, Alphabet's Google has emerged as a top rival with a deal to provide Claude chatbot creator Anthropic with its in-house chips called TPUs. Google is also in talks to supply Meta - a large Nvidia customer, according to media reports. To defend its position, Nvidia struck a deal, reportedly worth $20 billion, last year to license chip technology from Groq - a move that analysts say would boost its position in the booming market for inference, the process by which a trained AI model answer questions in real time. Nvidia last week also agreed to sell millions of chips to Meta, though it did not disclose the value of the deal. But Nvidia, the biggest winner of the AI boom, has itself stoked doubts about whether the spending is sustainable by drawing out the process of a potential $100 billion investment in OpenAI, one of its biggest customers. A recent media report said it plans to replace that commitment with a smaller $30 billion investment. "This earnings in particular is important because people are so concerned about AI spending - whether we're in a bubble," said Ivana Delevska, chief investment officer of Spear Invest, which holds the company's shares in an exchange-traded fund. "Showing that earnings are not really decelerating will be pretty important." Wall Street expects Nvidia to report that profit in the quarter ended January surged more than 62%, according to data compiled by LSEG, a slowdown from 65.3% growth in the previous quarter as it faces tougher comparisons with its previous earnings. Revenue likely jumped more than 68% to $66.16 billion. Analysts expect Nvidia to forecast that first quarter revenue will grow another 64.4% to $72.46 billion. The company has surpassed sales expectations for the past 13 quarters, though that delta has shrunk. RBC analysts expect the company to forecast April quarter revenue at least 3% above estimates. Spear Invest's Delevska, an Nvidia bull, sees the company forecasting sales as much as $10 billion above estimates, expecting it to surpass market estimates by more than 13%. STILL NO. 1 Analysts are still expecting demand for Nvidia's pricey chips, which act as the "brains" of servers processing huge AI workloads to remain robust, and garner most of Big Tech's massive spending to expand AI data center capacity this year. Nvidia's executives also hinted in January that they were discussing data center orders for next year with customers, leading several analysts to forecast the company would update a $500 billion order backlog figure it first offered in October. The biggest constraint on Nvidia's growth, though, could be supply chain bottlenecks that limit the speed of AI chip shipments as Nvidia and rivals are vying for space on contract chipmaker TSMC's 3-nanometer assembly lines. "We think Nvidia will meet expectations, but it is hard to see them delivering much upside in light of TSMC capacity," Jay Goldberg of Seaport Research Partners wrote in a note. But the potential return of Nvidia's AI chip sales to China - earlier restricted due to export curbs placed by the U.S. government - could help bump up sales. CEO Jensen Huang said last month he hopes China will allow the company to sell its powerful H200 AI chip in the country and that the license is being finalised. Rival AMD added sales of AI chips back to its forecast for the current quarter after it received licenses to ship some of its modified processors to China. Nvidia is expected to record adjusted gross margin of 75% in the fourth quarter, an increase of more than one percentage point from the year-ago period. Analysts don't expect the company to hurt from the global memory supply shortage. Nvidia's pricing power and the likelihood of it already having locked in high-bandwidth memory allocations for the year would cushion it from the impact of rising memory prices, they said. (Reporting by Arsheeya Bajwa and Aditya Soni in Bengaluru; Editing by Sayantani Ghosh)