Investors will be clearing their calendars to watch Nvidia’s quarterly results on February 26th. They’ll cover the final quarter of the AI chipmaker’s financial year. If Nvidia lives up to – or better yet, surpasses – expectations, that could reassure investors that the stock’s valuation and forecasts are justified. But if not, they may end up spooked.
Wall Street analysts expect Nvidia to keep revenue moving at an exceptional pace. In fact, they expect last quarter’s revenue to land between $37 billion and $38 billion, which would be some 70% to 72% higher than the same time last year. Huge, yes, but not the eye-popping 100%-plus rates we’ve seen before.
Conscious that the launch of its new products may impact its margins, investors will want reassurance that Nvidia’s gross margins – the percentage of revenue that becomes gross profit – stay thick. That shouldn’t be a stretch: the last quarterly figure reported was 75%, and the company predicted 73% for the upcoming quarters. On profit, analysts predict quarterly profit of $19.5 billion, up 61% from a year earlier, while some forecasts pitch even higher.
Investors will also be looking for signs that sales of its graphics processing units (GPUs) for data centers – expected to be the company’s growth engine over the coming years – can climb past its current peak. Pay special attention to any commentary on the performance and order outlook for its H100 (Hopper) and Blackwell GPUs.
Nvidia’s share price fell sharply after DeepSeek released a ChatGPT rival, trained for a fraction of the price. That’s because investors worried that companies would start cutting down on pricey chips and processors when building tools. But the selloff was short-lived: Nvidia’s share price has rebounded for now, with investors reassured that key clients like Amazon, Microsoft, and Alphabet show no signs of slowing their spending. Plus, if cheaper offerings increase the rate of AI usage, that extra business won’t hurt.
On the calendar
Monday: Earnings: Zoom.
Tuesday: US consumer confidence (February). Earnings: Home Depot, AMC Entertainment, Intuit.
Wednesday: US new home sales (January). Earnings: Nvidia, Salesforce, Snowflake.
Thursday: US economic growth (fourth quarter, 2024), US durable goods orders (January), Japan industrial production (January), Japanese retail sales (January). Earnings: HP.
Friday: Chinese purchasing managers index (PMI) (February).
What you might’ve missed last week
Global
- Gold climbed to a new record as geopolitical tensions underpinned demand for haven assets.
- Broadcom and TSMC started exploring a breakup of Intel.
US
- Figure AI’s new funding round looked to raise new equity at a $40 billion valuation, 15 times higher than it secured last year.
Europe
- European defense stocks rallied after NATO hinted that the region may need to spend more on its front-line.
UK
- UK inflation surged to a 10-month high in January.
- Consumer confidence in the UK hit a new low in February.
- Pay growth picked up to its highest level in eight months and employment unexpectedly rose in the final quarter of 2024 from a year earlier.
- The UK government unveiled a new plan to safeguard steel industry jobs following the US’s 25% tariff threat.
- Traders scaled back expectations for interest rate cuts to their lowest level since January.
- Mining giant Glencore is considering shifting its primary listing away from London.
Why it matters
Gold reached a new record above $2,950 per ounce as increased geopolitical concerns sent investors toward the haven asset. Fear that the US could abandon its support for Ukraine was the latest concerning development, compounding ongoing worries about how America’s pitched higher tariffs could influence businesses and whole economies.
In addition to frequently raising the prospect of tariffs, the new US president’s approach appears to be creating some tension in the relationships between the US and several of its traditional allies. The US is no longer flashing the cash on projects that offer limited value to Americans, so Europe may not be able to rely on the States to foot its security bill forever. European defense stocks rallied as NATO hinted that the region may need to increase its own defense budget to over 3% of the size of its economy – up from the old target of 2%.
Even with such serious shifts underway, many of the headlines were still dominated by AI advancements. Figure AI announced a new funding round that could value the robotics company at nearly $40 billion, 15 times higher than last year. Plus, Elon Musk’s xAI released its latest Grok model, claiming that it’s smarter than its competitors, while Perplexity AI launched a new free “Deep Research” AI Tool to compete with OpenAI’s offering of the same name.
UK inflation jumped to 3% in January, its highest in ten months, driven by higher food, fuel, and airfare costs. This unexpected rise has forced markets to rethink Bank of England (BoE) rate cuts, with traders now expecting just under two reductions this year. At the same time, wage growth remains strong, which could keep inflation high for longer. If inflation doesn’t cool down, the BoE may hold interest rates higher for longer, delaying relief for businesses and consumers.
Despite rising prices, the UK economy remains sluggish. Consumer confidence has dropped to a post-election low, with half of Britons expecting things to get worse. Meanwhile, businesses are warning of job losses, as £26 billion in new payroll taxes adds pressure on hiring. On top of that, the US’s proposed 25% tariffs on UK steel and aluminum exports could further strain British industries. To counter this, the UK government has announced a £2.5 billion investment plan to modernize steel production and protect domestic jobs.
At the same time, London’s financial markets are losing their appeal, with Glencore considering shifting its primary listing away from London. It joins a growing list of UK firms looking for better valuations and deeper liquidity in the US, a trend that has seen London lose 25% of its listed companies over the past decade. This erosion of capital markets threatens to undermine the UK’s status as a global financial hub.
Important Information
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