The DeepSeek dip is nearly over for Nvidia(NASDAQ: NVDA). I'm referring, of course, to the thrashing Nvidia's share price took last month when many investors panicked about the threat presented by Chinese artificial intelligence (AI) company DeepSeek. Although Nvidia's stock sank as much as 21% below its previous high, most of that loss has evaporated.
But while it's too late to buy Nvidia on the DeepSeek-induced dip, another potential catalyst beckons. The GPU maker is scheduled to announce its fiscal 2025 fourth-quarter and full-year results later this week. Should you buy Nvidia stock hand over fist before Feb. 26?
The underlying premise of the question
People concerned about whether to buy Nvidia stock in the next three trading days might be focusing on whether there's a good possibility that Nvidia's share price will jump after its Q4 update after the market closes on Feb. 26.
History does signal that a post-earnings jump could be coming. Especially following OpenAI's launch of ChatGPT in November 2022, Nvidia has a great track record of exceeding Wall Street's earnings expectations. And its share price has often performed well afterward.
The "E's" on the above chart show when Nvidia reported its quarterly earnings. After six of those nine updates, the stock rose afterward. However, astute readers will notice that Nvidia's shares didn't rise immediately after its two most recent quarterly updates.
Will Nvidia stock jump after its Q4 update?
The short answer to this question is that there's no way to know for sure. However, we can make an educated guess.
First, it's important to understand what it will take for Nvidia to beat Wall Street's expectations. The average Q4 revenue estimate of analysts surveyed by LSEG is $38.13 billion. The average earnings per share (EPS) estimate is $0.85. To hit these numbers, Nvidia must deliver year-over-year revenue growth of roughly 72.5% and EPS growth of 63.5%.
Nvidia could top analysts' estimates even with slowing growth. The company reported year-over-year revenue growth of 94% in the third quarter of fiscal 2025 and EPS growth of 103%. However, management's Q4 guidance projects revenue of $37.5 billion, plus or minus 2%. Nvidia will have to be near the upper end of the range to perform better than Wall Street expects.
For the stock to jump enough to justify buying it hand over fist before the Q4 update, though, Nvidia can't merely scrape by with a revenue and earnings beat. It will either need to handily exceed estimates and/or provide an especially encouraging outlook for fiscal 2026. Can the company do this? I think the chances are pretty good for three main reasons.
First, Nvidia CFO Colette Kress said in the company's Q3 earnings call, "Blackwell demand is staggering." She added that Nvidia was on track to top its previous revenue estimate for the new GPU chips even though it couldn't keep up with demand.
Second, several of Nvidia's biggest customers revealed in recent weeks that they're continuing to invest heavily in AI infrastructure. Amazon, Microsoft, Google parent Alphabet, and Meta Platforms were all singing from the same page in their latest quarterly updates. That bodes well for Nvidia.
Third, those huge customers aren't flocking to Advanced Micro Devices, Nvidia's primary rival. AMD reported strong Q4 revenue growth earlier this month but lower than expected.
The longer-term question
I won't be surprised at all if Nvidia beats Wall Street's Q4 estimates and provides a strong outlook, with its shares popping when the market opens on Feb. 27. But investing is not about the short term or trying to jump in and out of stocks ahead of a certain move. The long-term question is: Can Nvidia's momentum continue much longer?
Some believe the answer to that question is "no." They point to Nvidia's valuation (shares trade at 32.6 times forward earnings). They predict the demand for AI chips will wane, perhaps in part due to more efficient models such as DeepSeek's that require fewer GPUs.
I'm more optimistic, albeit cautiously so. My hunch is that advances in AI will spur greater demand for Nvidia's chips rather than lead to lower demand. I also fully expect Nvidia will continue to out-innovate the competition.
Sure, Nvidia's momentum will eventually slow. It's inevitable. However, buying the stock before Feb. 26 is probably a smart move, in my view. Even if you don't invest in Nvidia by then, the stock could still have plenty of room to run afterward.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keith Speights has positions in Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
