NVIDIA Faces "Big Test": Four Key Takeaways Ahead of Earnings

NVIDIA is set to release its financial results for the fourth quarter of fiscal 2025. Wall Street is holding high expectations for this report and the subsequent conference call, with four primary areas of focus currently under scrutiny.

Is a "Star Pupil" Report Imminent?

As the most sought-after "AI darling" of the U.S. stock market over the past two years, NVIDIA’s earnings have historically outperformed Wall Street expectations. This was true three months ago when third-quarter revenue exceeded analyst estimates, reaching $57.01 billion—a 62.5% year-over-year increase. At that time, NVIDIA projected fourth-quarter revenue of $65 billion (plus or minus 2%) and a GAAP gross margin of 74.8% (plus or minus 0.5%).

 

According to TradingView data, market consensus suggests that NVIDIA’s fourth-quarter revenue will continue its rapid ascent to $63.6 billion, representing 68.3% year-over-year growth. However, this growth rate is notably lower than the 77.9% surge recorded in the same period last year. Over the past 30 days, analysts tracking the company have broadly reiterated their expectations for continued robust momentum.

 

Looking at competitors who have already reported, the outlook is mixed: Qorvo’s fourth-quarter revenue rose 8.4% year-over-year, meeting expectations, while AMD’s revenue grew 34.1%, beating estimates by 6%. Despite these figures, market reactions were lukewarm; Qorvo’s stock fell 6.8% following its report, and AMD’s shares have declined a total of 17.3%.

 

This has sparked concern among investors that a similar pattern could play out for NVIDIA—especially given that the market impact of its "surprises" may be facing diminishing marginal returns. Matt Weller, Global Head of Research at City Index and Forex.com, noted that if NVIDIA merely "meets" earnings expectations, it is unlikely to drive the stock higher. Conservative guidance could further exacerbate fears of a potential slowdown in AI capital expenditure.

Four Key Takeaways for the Earnings Call

Synthesizing views from several Wall Street investment banks, four critical areas will define the upcoming conference call:

 

First: The Data Center Business. Specifically, the market will focus on the diversity of demand. Wall Street remains anxious about the high capital expenditures of U.S. tech giants; any break in that capital chain could cause a ripple effect across the AI supply chain. Weller pointed out that if management indicates growth is broad-based—spanning hyperscalers, enterprise clients, and sovereign AI projects—rather than concentrated among a few large buyers, the stock reaction is likely to be more positive.

 

Second: The Blackwell Ramp-up. A critical topic remains the production scaling of the top-tier Blackwell chips. Morgan Stanley analysts noted in a recent report on the "AI bubble" that investors are looking for positive Blackwell progress alongside earnings growth, as upcoming models trained on Blackwell could reignite high expectations for future AI capabilities. Weller added that since demand for next-generation semiconductors is virtually unlimited, the focus will be on yields and shipments relative to expectations, as well as any hints of extended lead times.

 

Third: Supply Chain Bottlenecks. Potential constraints arising from recent shortages in memory chips and power supplies will be under the microscope. However, Joseph Moore and his team at Morgan Stanley remain optimistic, stating that while shortages in DRAM, NAND, HDD, CPUs, and power supplies could theoretically become bottlenecks, they have yet to see this materialize as demand for all forms of AI computing remains strong.

 

Finally: Gross Margins. Traders will closely watch management’s characterization of margin pressure—whether it is described as transitory (short-term pressure that eases as production scales) or structural (a new, lower range). Weller warned that if the margin outlook is even slightly below market expectations, the stock could face a sell-off regardless of a quarterly beat.

 

Weller predicts: "The stock price is likely to react first to guidance, followed by any commentary on the Blackwell ramp-up, and finally to any changes in the company’s gross margin trajectory."