Few stocks have captured the attention of investors quite like microchip manufacturer NVIDIA (NASDAQ: NVDA), which is set to report earnings on February 26th. Despite a one-month performance of -5.80%, market sentiment remains hopeful for a rebound. Analysts have raised their price target for the company to $168.21 per share, representing a 28% upside from its opening price on Monday.
Whether or not the company hits these projected price targets will largely depend on its Q4 earnings data and whether it meets analyst expectations. Analysts are expecting big things, with a consensus EPS of $1.93 per share—an increase of about 138% from its last reported EPS of $0.81.
High Hopes for an American AI Leader
Despite recent price stumbles, analysts remain exceptionally optimistic that NVIDIA will weather the storm of international innovation. The company is predicted to report a robust 72% increase in sales and a 43% increase in earnings next year. Analysts maintain a Moderate Buy rating, further confirming market optimism for the upcoming earnings release.
Much of this optimism can be attributed to two growing sectors of NVIDIA’s current operations: data centers and AI research and development. The rise of generative AI has created a wealth of opportunity for the microchip manufacturer, with the NVIDIA Blackwell RTX architecture offering image generation at twice the speed of standard GPUs. This new development could quickly develop into a rally if earnings estimates are met when combined with NVIDIA's vertical integration of data center management.
While NVIDIA’s AI and microchips attract the most attention from headline makers, its data centers have also been standout profit centers. In the third quarter of fiscal 2025, NVIDIA’s data centers have seen explosive growth, producing $30.77 billion in revenue. This represents a year-over-year growth rate of more than 110%, with experts expecting that fourth-quarter fiscal statements will reveal a revenue of $33.17 billion.
Earnings Estimates Remain Optimistic Despite Setbacks
[content-module:Forecast|NASDAQ:NVDA]While NVIDIA has long dominated the microchip industry, recent international AI advancements have caused the stock to wobble. In late January, NVIDIA and other U.S. technology firms saw share prices tumble upon the release of DeepSeek, a free, open-source large language model developed in just under two months at a cost of less than $6 million.
The release of DeepSeek caused investors to take pause at the amount of institutional money pouring into U.S. tech firms, with fears that domestic chip manufacturers may no longer be leaders in the industry. American hedge funds have been steadily selling off shares of American tech companies to invest in Chinese competitors—but leadership believes that this sell-off is a misstep.
On Monday, Jensen Huang addressed the sell-off that erased $600 billion in corporate value, calling the event an investor “misunderstanding.” While Huang called DeepSeek’s advancement “impressive,” the CEO assured investors that these developments will not replace the need for NVIDIA’s chips. On the contrary, Huang predicts that continued AI advancements will require increasing computing power, which NVIDIA is primed to provide as generative AI becomes more complex.
“I think the market responded to R1, as in, ‘Oh my gosh. AI is finished,’” Huang told reporters in a pre-recorded interview released on February 24th. “You know, it dropped out of the sky. We don’t need to do any computing anymore. It’s exactly the opposite.”
The Road Ahead for NVIDIA
Regardless of earnings results, NVIDIA's future will largely depend on the long-term AI landscape and domestic infrastructure developments. The solid demand for data processing centers is an important factor that sets NVIDIA apart from other microchip manufacturers. Moving forward, NVIDIA’s investment in its Blackwell architecture could be the key to a future rally as AI tech and processing power demands increase both domestically and internationally.
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