Nvidia Corp. is poised to release its fourth-quarter earnings report for the year 2024, and analysts are abuzz with anticipation over what promises to be one of the most pivotal earnings sessions for the company. The world’s largest chipmaker, with a market valuation of $3.1 trillion, has seen unprecedented growth amid the AI boom. But now, new threats have emerged, especially with the rise of the Chinese AI start-up DeepSeek, which is changing the game for high-performance chips.
The earnings report, expected later today, is surrounded by high expectations. Industry experts anticipate Nvidia will report revenues of around $38.15 billion—a remarkable 73% increase from the previous year. Adjusted earnings per share (EPS) are projected to rise by 64%, hitting approximately $0.85. This continued growth is largely attributed to the booming demand for its Hopper chips, which power many AI applications, especially among data centers.
According to Kate Leaman, chief market analyst at AvaTrade, “Nvidia’s Q4 earnings are coming up later today, and investors will be closely following the results. Expectation are sky-high.” The importance of this report is amplified by competition from DeepSeek, which has recently introduced AI models requiring significantly fewer GPUs, potentially dampening demand for Nvidia’s premium offerings. “The key question for Nvidia’s Q4 earnings isn’t just about the numbers, but whether the company can maintain its commanding position as AI evolves,” remarked Jacob Bourne, technology analyst at eMarketer.
Despite early fears, DeepSeek has created new opportunities for Nvidia as demand for its H20 chips has surged among Chinese companies seeking to integrate DeepSeek's models. Reports indicate major firms like Tencent and Alibaba have ramped up their orders for these chips, after initially shunning Nvidia’s offerings following US export restrictions. This demand surge reflects how quickly the market dynamics are shifting. Insiders suggest Nvidia shipped about 1 million H20 chips last year, generating over $12 billion, and this could rise amid the increased integration of DeepSeek technology.
While leveraging its strengths, Nvidia faces challenges from competitors and geopolitical tensions affecting chip sales to China. The potential for stricter export restrictions under the current U.S. administration could pose obstacles for Nvidia's ability to fulfill growing demand. Analysts at TD Cowen recently noted concerns surrounding Microsoft’s involvement, as the tech giant is reportedly reducing leasing with private data center operators, raising questions about future spending on Nvidia’s products.
Alvin Nguyen, senior analyst at Forrester, emphasized the growing significance of the competitive threat posed by DeepSeek: “DeepSeek has established a new and lower base of performance for generative AI… Allowing more organizations to experiment with AI.” Predictions suggest if DeepSeek continues to succeed, it could provide competitors, such as AMD and Intel, opportunities to penetrate the lower end of the AI infrastructure market, intensifying competition for Nvidia.
The anticipation surrounding Nvidia’s earnings isn’t just about the potential financial numbers; investors are eager for guidance on future demand trends for AI chips. Many are curious about the transition from Nvidia’s Hopper architecture to its upcoming Blackwell chips, which are projected to bring billions of dollars in revenue. Analysts expect Blackwell revenue could exceed $20 billion by the first quarter of 2025, meaning production capabilities and supply chain dynamics will be under intense scrutiny.
Historically, Nvidia has maintained its leadership position as the go-to supplier for AI chipsets. The impact of DeepSeek’s disruptive technology, initially felt through Nvidia's stock drop, stresses how sensitive the market is to innovation and competition. According to analysis, even after the initial shock, there hasn’t been any slowdown reported for AI enterprise deployments, which remain strong.
Looking forward, it will be interesting to observe not only Nvidia's financial performance but how effectively it communicates its strategies to tackle the challenges posed by both DeepSeek’s efficiency claims and broader geopolitical factors affecting supply chains. This earnings call could set the tone for Nvidia moving forward, as it navigates both opportunities and challenges within the fast-evolving AI market space.
The financial results will likely reveal how Nvidia plans to respond to potential disruptions posed by competitors and regulatory environments. Insights from analysts will indicate whether Nvidia can sustain investor confidence and continue its remarkable growth or if market shifts will require fundamental adjustments to its strategy.