DeepSeek’s AI Breakthrough Puts Pressure on Nvidia Ahead of Earnings Report

Nvidia’s Earnings Report Expected to Be Strong Despite Market Jitters

Nvidia will release its quarterly results today, and the market is on edge. The recent breakthrough by China’s DeepSeek has raised questions about the massive investments in AI development. However, Chris Rossbach of J. Stern remains optimistic, telling Reuters that he expects the numbers to be strong.

AI Development Costs Under Scrutiny

The emergence of DeepSeek has caused a stir in the tech world. The Chinese startup has demonstrated AI models that rival the best in the industry at a fraction of the cost. This has led to concerns about the sustainability of high spending on AI development, particularly for companies like Nvidia that have heavily invested in this area.

Chipmaker Nvidia reports quarterly results today and the market is nervous, after China's DeepSeek breakthrough raised questions about the huge spending on AI development. Chris Rossbach of J. Stern told Reuters he expects those numbers to be strong. pic.twitter.com/hOeamYKd0X

— Reuters (@Reuters) February 26, 2025

Market Reactions and Investor Sentiment

Despite the nervousness in the market, analysts are predicting strong performance from Nvidia. The company’s earnings report is expected to show significant growth, driven by the demand for its AI products.

Michael Brown, Senior Research Strategist at Pepperstone, noted, “Earnings from Nvidia after the close on Wednesday are the most notable risk event for participants to navigate, with focus likely to fall on NVDA’s guidance as to whether the current staggering pace of revenue growth, and wide margins, can be maintained”.

DeepSeek’s Impact on Nvidia’s Market Position

DeepSeek‘s breakthrough has undoubtedly put pressure on Nvidia. The Chinese company’s AI models are not only cost-effective but also highly efficient, challenging Nvidia‘s dominance in the AI chip market. However, Stefan Hofer, Managing Director and Chief Investment Strategist at LGT Bank, believes that the demand for powerful GPUs will remain strong.

“The AI landscape is evolving very fast, as illustrated by the advent of China’s DeepSeek. But does this mean that end demand for powerful GPUs is going to fall meaningfully? Or that the pace of building new data centers is going to drop off? We are arguing on both points, ‘no'”.

Nvidia’s Financial Outlook

Analysts are expecting Nvidia to report adjusted earnings of 85 cents per share in Q4, with revenue of $38.08 billion and net income of $19.58 billion. The company’s guidance for the next fiscal year will be closely watched, as it will provide insights into how Nvidia plans to navigate the competitive landscape shaped by DeepSeek‘s advancements.

Current Stock Price

As of today, Nvidia’s stock price is $126.63, reflecting a 2.80% decrease

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