Nvidia’s (NVDA) earnings report will serve as a pivotal assessment for the AI sector, especially given the stock’s disappointing start to the year. However, even if the semiconductor titan surpasses Wall Street’s ambitious forecasts, that doesn’t automatically mean the stock will recover its previous momentum.
Indeed, the future appears challenging as worries over China’s AI startup DeepSeek, decelerating growth, and export limitations continue to pose potential risks to the stock. This has led Wall Street to convey a straightforward message: prepare for significant fluctuations.
“We anticipate considerable volatility…this has been a recurring theme,” Raymond James chief market strategist Matt Orton shared during an appearance on Yahoo Finance’s Catalysts.
Listen: Is Nvidia too pricey?
The options market indicates a 7% fluctuation in Nvidia’s shares when the semiconductor company releases its fourth-quarter earnings. While this reflects a more subdued reaction compared to previous quarters, it still represents a significant amount—equating to approximately a $230 billion change in market value.
Moreover, analysts caution that this quarter’s volatility may persist for an extended period.
David Boole, managing director of BayCrest equity derivatives, suggested that the stock could ride a wave of ups and downs for a month following the earnings announcement, as some investors take advantage of the dip triggered by the DeepSeek-led sell-off, while others may remain uneasy about the outcomes.
“We had a preview about a month ago,” Boole remarked. “The question is, what could they possibly say that would drive Nvidia’s stock up another 20% in one day?”
In the meantime, Nvidia’s relentless growth has slowed. The stock has only appreciated 0.9% since the year’s outset, following a 3.9% decline over the past month. This is a stark contrast to the company’s remarkable performance in 2024, where shares soared 171%, contributing to over 22% of the S&P 500’s gains.
Nvidia is no longer the leading contributor to the S&P 500. Meta (META) has taken the lead, contributing 13% to the index’s year-to-date increase, compared to 5% from Nvidia.
Despite the uncertainties in the near term, many Wall Street analysts are optimistic about Nvidia’s long-term outlook, as highlighted by Yahoo Finance’s executive editor Brian Sozzi. Bank of America’s Vivek Arya acknowledges the challenges this quarter faces, such as the Blackwell transition, declines in Hopper, and restrictions related to China, but anticipates strong long-term prospects.
“Post-results, the stock may experience volatility, yet we foresee a return to positive momentum as investors look ahead to Nvidia’s innovative product pipeline (GB300, Rubin) and its expansion into emerging markets like robotics and quantum technologies at the upcoming GTC conference on March 17,” Arya noted in a recent client communication.
