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On Nvidia’s earnings call this week, investors will be focused on what executives say about how the Chinese AI upstart DeepSeek might impact spending in the U.S. tech sector. Heading into the call on Wednesday, investors expect that DeepSeek will have little effect on Nvidia’s sales. However, they will be closely watching for any guidance on the margins for its new Blackwell chip, which is currently launching.
Yet again, Nvidia enters an earnings week with only its past stellar performance to beat. It is, as usual, a victim of its own success and has only to prove to the market that it will continue raising the bar.
For several years now, Nvidia has accustomed investors to a world in which it outperforms their expectations every quarter. Anything less and the stock takes a beating.
Nvidia has to do its “normal exceed” or else it will get “crapped on,” Baird managing director Ted Mortonson told Fortune.
Another strong quarter from Nvidia isn’t in doubt. Nvidia can’t just meet the $37 billion in revenue it forecasted, it has to exceed it. As of now that seems to be on tap, with Wall Street expecting roughly $38 billion.
Investors are expected to parse the call for clues about the future of AI spending and changes to the industry as a result of DeepSeek. Amazon, Meta, Microsoft, and Alphabet still expect to allocate a projected $325 billion to capital expenditures this year, most of which will go toward AI research and development. And while DeepSeek certainly roiled the stock market, it appears to have done little to change the estimated AI spending from the sector’s biggest companies.
“We have seen not one AI enterprise deployment slow down or change due to the DeepSeek situation,” wrote Wedbush tech analyst Dan Ives.
Among tech bulls, the consensus is that DeepSeek’s success only proves the pace of innovation, and therefore development, is accelerating, and that demand for Nvidia chips will only increase. Governments announced major private-public partnerships for AI investment with the U.S.’s Stargate Project and Europe’s InvestAI initiative, UBS analyst Timothy Arcuri wrote in a note to investors last week.
“Even as costs have come down, the spigot of investment dollars flowing into AI infrastructure has only widened further … and we think Nvidia is positioned to remain the primary beneficiary of all this spend,” Arcuri said.
The expectation for Nvidia is that the company will exceed its revenue targets and then further raise its guidance. Last quarter Nvidia had $35.1 billion in revenue, which was a 94% increase from the year before. On that call, CEO Jensen Huang trumpeted the expected demand for its new Blackwell chips, saying production was in “full steam.” Huang then told investors that Nvidia would deliver more Blackwell chips than it had previously expected.