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Nvidia will deliver its earnings report for the fourth quarter of 2024 Wednesday evening, which investors will be watching closely for any signs of slowing demand for semiconductor chips. The chipmaker’s financials will face scrutiny over possible signals of an end to the AI-fueled market boom that has propelled the company to a stratospheric valuation of $3.1tn.
Analysts expect Nvidia to maintain its leadership position as the maker of the AI industry’s favorite chips, but recent news has presented new potential challenges to the company’s ownership of the market. For one, analysts at TD Cowen published findings earlier in the week that Microsoft, one of Nvidia’s biggest customers, was cancelling leases with private data center operators. Investors expressed concerns about the sustainability of mass investment into AI infrastructure, including Microsoft’s $80bn, which would mean less spending on Nvidia’s wares.
This earnings call will also be the first look at the company’s financials and demand since China’s DeepSeek AI introduced an AI model that beat many of those made in the US while requiring a fraction of the training and investment. The introduction of DeepSeek initially sent Nvidia’s valuation tumbling by hundreds of billions because the Chinese AI seemed to show that new models did not necessarily need to rely on Nvidia’s most expensive, top-of-the-line graphics processing unit (GPU), as most cutting-edge models out of the US do.
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Despite the company’s past stellar performance, analysts expect investors to look for other signs that the company will be capable of meeting the moment as demand for the chips that power AI models remains steady.
“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,” said Jacob Bourne, a technology analyst at eMarketer. “Even if Nvidia posts another quarter of stellar growth, the market reaction will depend on how well it can convince investors that it can tackle these challenges.”
Some analysts predict the ripples from DeepSeek’s launch may not have an immediate impact on Nvidia but could allow competitors like AMD and Intel to “gain a foothold on the lower end of the AI infrastructure market”, said Alvin Nguyen, a senior analyst at Forrester.
“DeepSeek has established a new and lower base of performance for generative AI (specifically for chain-of-thought/reasoning models), allowing for more organisations to experiment with AI,” Nguyen added.
