NVIDIA Q4 2024 Earnings Preview: AI Dominance Faces Critical Test Amid DeepSeek Challenge

As NVIDIA prepares to release its fourth-quarter earnings after market close on Wednesday, February 26, 2025, investors are bracing for what could be the most pivotal earnings report in the company's history. The world's largest chipmaker by market value has experienced remarkable growth over the past two years but now faces heightened scrutiny following January's DeepSeek-triggered selloff that momentarily erased nearly $600 billion in market value. The market implied one-day move based on options data is approximately 9.87%.

Earnings Estimates

For the fourth quarter, analysts expect NVIDIA to report:

• Revenue of $38.1 billion, representing a 72% year-over-year increase

• Adjusted earnings per share of $0.84-$0.85, up 64% from last year

• Data center revenue of $34.06 billion, an 82% year-over-year increase

• Gaming revenue of $3.02 billion

• Professional visualization revenue of $507.3 million

• Automotive revenue of $459 million

• Adjusted gross margin of 73.5%

• Net income of approximately $19.6 billion

Earnings Estimates. Source: Bloomberg

Guidance and Outlook

Forward guidance will be the most critical component of this earnings report. Analysts are forecasting Q1 2025 revenue of approximately $42.26 billion, Q1 adjusted gross margin of around 72.1%, and capital expenditure of $760 million for Q1. Full-year 2026 revenue projections currently stand at $198.63 billion.

Blackwell Chip Transition

The rollout and ramp-up of NVIDIA's next-generation Blackwell chips will be under intense scrutiny. The company has indicated these chips will bring in several billion dollars in revenue this quarter, but has also acknowledged that demand exceeds supply capabilities. Analysts will be looking for clarity on production timelines and supply chain health, expected Blackwell revenue contribution in upcoming quarters, transition dynamics between older Hopper architecture and Blackwell, and early customer feedback on performance and efficiency gains.

UBS analysts expect Blackwell revenue of approximately $9 billion for Q4, projecting it to more than double to over $20 billion in Q1 2025. They anticipate this will offset an expected 5% sequential decline in Hopper sales.

DeepSeek Impact and Competitive Landscape

The emergence of China's DeepSeek AI model in January raised concerns about whether future AI models could require fewer high-end chips. Investors will closely monitor management's response to DeepSeek's efficiency claims, any changes in customer purchasing patterns, the long-term strategy to maintain dominance in the AI chip market, and potential shifts in R&D focus or product roadmaps.

Despite initial panic, several analysts report that enterprise AI deployments have not slowed, with Wedbush's Dan Ives noting "NOT ONE AI enterprise deployment slow down or change due to the DeepSeek situation."

Capital Expenditure from Major Customers

NVIDIA's fortunes remain tightly linked to spending by major cloud and tech companies. Recent earnings from the "Magnificent 7" tech giants have revealed record capital expenditure plans for 2025, with a combined $325 billion in capex planned, representing a $100 billion increase from 2024 levels. Microsoft, Google, Meta, and Amazon all affirmed or increased their AI investment plans during their recent earnings calls. According to some analysts, AI reportedly comprises 10-15% of many IT budgets for 2025.

Regulatory and Geopolitical Challenges

The company continues to navigate complex geopolitical tensions, particularly regarding chip sales to China. The impact of Biden administration's January restrictions on AI chip exports, potential policy changes under the Trump administration, and strategies to maintain growth despite China market challenges will be important topics during the earnings call. Bank of America analysts believe "rising demand from the west (US cloud, enterprise, OpenAI Stargate etc.) to offset China headwinds for NVIDIA."

NVIDIA (D1 Interval)

NVIDIA is trading near its 200-day MA ($126.50), a crucial support level. The stock has formed a descending channel since December 2024, with lower highs and lows establishing a bearish short-term trend.

The RSI in the neutral zone shows bearish divergence with lower highs since December, while the MACD's bearish crossover signals increasing downward momentum. Key support is set at 200-day SMA with another at 61.8% Fibonacci retracement level which has led to reversal.

Bulls need a close above $130 (38.2% Fibonacci retracement level) to signal reversal, while sustained trading below the 200-day MA could trigger further decline toward 61.8% Fibonacci retracement level.