"AI Faith" faces a major test! NVIDIA's earnings report is coming this week, and Wall Street is on high alert for a market shock

According to Zhitong Finance APP, NVIDIA (NVDA.US) earnings report will be a key test for artificial intelligence (AI) trading. The company's stock price has performed poorly at the start of this year, and even if the results exceed Wall Street's high expectations, it may be difficult to ensure a recovery in its upward trend. The rise of Chinese AI startup DeepSeek, slowing growth, and export restrictions remain potential factors affecting the stock. This has prompted Wall Street to send a clear message: be prepared for a wild market.

Matt Orton, Chief Market Strategist at Raymond James, stated, "We expect significant volatility... we see this every time."

The options market predicts that when chip giant NVIDIA announces its fourth-quarter results, its stock price will fluctuate by 7%. Although this reaction is relatively mild compared to recent quarters, the volatility is still notable—equivalent to a market value fluctuation of about $230 billion.

NVIDIA stock price volatility after the earnings report release

Professionals warn that the difference this quarter compared to others is that the volatility may last longer.

David Boole, Managing Director of BayCrest Stock Derivatives, indicated that NVIDIA's stock price may experience rollercoaster-like fluctuations in the month following the earnings report, as some investors have already bought the dip after the sell-off triggered by DeepSeek, while others, spooked, may not be satisfied with the earnings results.

Meanwhile, NVIDIA's once strong momentum has slowed. Since the beginning of this year, the stock has only risen by 0.9%, and it has fallen by 3.9% in the past month. In contrast, the stock performed exceptionally well in 2024, soaring 171%, accounting for over 22% of the S&P 500 index's gains in 2024.

This chip giant is no longer the largest contributor to the S&P 500 index's gains. Meta (META.US) now leads, contributing 13% to the benchmark index's gains so far this year, while NVIDIA accounts for only 5%.

Despite the uncertainties in the short term, many analysts on Wall Street remain optimistic about NVIDIA's long-term prospects. Vivek Arya from Bank of America warned that Blackwell transformation, Hopper decline, and export restrictions will adversely affect NVIDIA, but strong long-term prospects follow.

Arya stated, "After the earnings release, NVIDIA's stock price may experience volatility, but we expect positive momentum to resume as investors look forward to NVIDIA launching leading new product lines (GB300, Rubin) at the upcoming GTC conference (March 17) and fully expanding the potential markets for robotics and quantum technology."

For investors hoping to profit from NVIDIA's earnings report, this report may bring opportunities to other areas of the AI industry. Matt Orton from Raymond James recommends software and cybersecurity stocks, calling them the best choices for the "next phase" of AIOrton added, "You want to digest any fluctuations brought by NVIDIA and see where else you can invest your money... because this market is still volatile recently."

He stated, "After the explosion of DeepSeek, we have seen a fork in other areas of software and artificial intelligence. I remain optimistic about the software industry, especially the cybersecurity sector, due to the increase in hacking incidents and the continued rise in enterprise-level investments."

NVIDIA is scheduled to announce its fourth-quarter earnings after the U.S. stock market closes on February 26 (Wednesday), with the market expecting revenue to grow by 73% year-on-year, a significant slowdown compared to the 265% increase in the same period last year