🔍 The focus this week: Nvidia’s results

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), Japan retail sales (January). Earnings: HP.
• Friday: China 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 inflation jumped to 3% in January, its highest level in ten months.

✍️ What does all this mean?

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.

Besides threatening tariffs more often than your average Joe sneezes, the new US president is fraying the relationship between the US and various 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%.

The UK can’t catch a break. January’s inflation print of 3% was higher than economists’ forecasts of 2.8%. So now, the Bank of England has interest rate decisions to make. Britain is in need of a trim: consumer confidence has dropped to a post-election low, and lower rates would lessen the pressure on Brits, encourage spending, and push along the slow-moving economy. That hot-to-touch release complicates what would otherwise be a straightforward decision, though, by suggesting higher-for-longer rates are needed to bring down inflation.

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 – as he would – 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.

Stay classy ✌️

Your Finimize Analyst team