After the impact of DeepSeek, NVIDIA will face the test of its financial report

Source: Wind

According to a report from Hong Kong's Wind Information, NVIDIA will announce its earnings after the market closes on February 26. Despite the impact of DeepSeek on its stock price, Wall Street remains optimistic about its AI technology advantages, expecting a positive reaction to the earnings report. Evercore ISI analyst Mark Lipacis believes that NVIDIA's leading position in the hyperscale cloud services market and its strong software ecosystem give it a competitive advantage for the next 5 to 10 years.

NVIDIA's Stock Price Affected by DeepSeek

Since the beginning of this year, NVIDIA's stock price has fallen by 0.54%, while the S&P 500 index has risen by 3.14%. NVIDIA's stock price is influenced by multiple factors, with DeepSeek being one of them.

DeepSeek is an artificial intelligence software from China that indicates the cost of training models may be lower than expected. This breakthrough has raised market concerns that future demand for NVIDIA's graphics processing units (GPUs) may decrease or shift towards application-specific integrated circuits (ASICs) from companies like Broadcom and Marvell Technology.

However, Evercore ISI analyst Lipacis remains optimistic about NVIDIA's market positioning after discussions with "senior AI engineers" from hyperscale cloud service providers. He noted that NVIDIA "remains the preferred platform for hyperscale cloud service customers, with its strong software ecosystem and extensive developer community keeping it 5 to 10 years ahead of other competitors in the market."

Additionally, Lipacis believes that the DeepSeek case shows that large language models "are still rapidly evolving," which is good news for NVIDIA, as the company has a "flexible and programmable platform." NVIDIA's chips possess both training and inference capabilities, and with inference becoming increasingly important, experts predict that NVIDIA will be the most effective participant.

Lipacis pointed out that NVIDIA's weak stock price is partly due to market concerns about the launch timing of the Blackwell chip, but overall demand still exceeds supply. He wrote in his report: "If the B100 cannot be supplied in time, customers will still purchase NVIDIA's existing product, the H100." He was referring to the Blackwell and Hopper series chips.

Wall Street Optimistic About NVIDIA's Earnings Report

Ahead of NVIDIA's earnings report, Lipacis has given its stock a "tactical outperform" rating, expecting the company to release a "positive report and outlook" on February 26.

He added: "We believe the biggest risk is that delays in Blackwell could lead to a gap in shipments."

Despite the impact of DeepSeek on NVIDIA's stock performance this year, Lipacis is not the only one optimistic about NVIDIA's performance outlook. UBS analysts have stated that they expect NVIDIA to perform strongly in the quarter ending in January and the quarter outlook ending in AprilThe earnings expectations for Blackwell chips have "turned upward," while NVIDIA's product portfolio is shifting from Hopper to the newer Blackwell.

UBS also believes that as original equipment manufacturers (OEMs) increase inventory, NVIDIA's revenue sources will grow. At the same time, UBS expects total revenue from Blackwell to reach $9 billion for the quarter ending in January. UBS maintains a target stock price of $185 for NVIDIA and gives it a buy rating.

Bank of America analyst Vivek Arya also stated that NVIDIA is his top stock pick for 2025.

In a report to clients, Arya wrote: "Investor sentiment may rise after the earnings call because: 1) we expect NVIDIA to reaffirm the execution of Blackwell; 2) confidence in fiscal year 2026/calendar year 2025, with data center sales expected to grow more than 60% year-over-year (still below TSMC's expectation of over 100% year-over-year growth in the AI sector for 2025); 3) creating excitement in advance of the flagship GTC conference on March 17, focusing on GB300, Rubin, and other physical AI projects like robotics."