"If Nvidia sneezes, everyone else catches a cold": what to expect from the AI chip leader's report

Investors hope that the market leader of chips for artificial intelligence Nvidia on February 25 will present a strong report and give a positive outlook. However, analysts fear that even positive figures may not be enough to boost the stock, Bloomberg writes. Nvidia has played a key role in driving new stock market records in recent years, but amid growing skepticism about AI, analysts worry that the "Nvidia effect" is starting to fade.

The fate of the stock after the report will now depend not only on earnings, but also on Nvidia CEO Jensen Huang's ability to prove the company's leadership in the face of stiff competition and macroeconomic instability.

Nvidia's stock price has been moving without any pronounced momentum for months now, up just 1.7% since the start of the fourth quarter - less than the S&P 500 index's 3.3% gain over the same period. Stocks have barely made it to the plus side of the 2025 year-end. With nearly two months of 2026 behind us, the stock has failed to return to growth: it has barely held in the green since early January and remains among the outperformers among broad market companies. That's a steep decline in momentum for a company that was recently the index leader and posted triple-digit annual growth, Bloomberg points out. At the premarket on February 23, the securities were rising 0.3%.

"It will be a meaningful report [by Nvidia], but I wouldn't rule out a decline in the stock - investors may see the results as simply not strong enough," believes Rhys Williams, chief strategist at Wayve Capital Management. - According to our estimates, the report and the forecast will be at an acceptable level, but may not meet the so-called market whisper expectations (unofficial benchmarks that participants set above the consensus forecast. - Oninvest)."

The weak performance of Nvidia shares is largely due to capital rotation: investors are leaving technology giants amid concerns about hundreds of billions of dollars being spent on AI development. In addition, a number of external risks are weighing on the market - for example, the geopolitical backdrop, as well as the slowdown in economic growth in the U.S., Bloomberg explains.

"Fundamentally, the Nvidia story remains strong. The only question is whether investor optimism will remain as strong," said Matt Stuckey, chief portfolio manager at Northwestern Mutual Wealth Management. - Anxiety levels are rising in many segments of the investment strategy involving Nvidia."

However, Nvidia's stock stagnation has a bright side: the company's market valuation has dropped significantly, Bloomberg emphasizes. With a P/E (price-to-earnings) ratio below 24, the stock is trading near its lowest multiple in five years (with an average of about 38).

The relatively low price may become a catalyst for buying if investors are satisfied with the comments of the company's CEO Jensen Huang. For long-term prospects, statements regarding the company's leadership in the segment of chips for inference - that is, data processing and output based on AI models - will be key. It is in this direction that competition from AMD, Amazon, Broadcom and Alphabet is intensifying, Bloomberg specifies.

"Nvidia has acted as something of a backstop for the market for a long time," notes Will McMahon, chief equity strategist at MFA Wealth. - Investors are expecting the company to release a strong report and thereby ease market tension a bit."

However, even if Nvidia shares rise, their multiples could remain under pressure. "Valuations will be in compression until the market gets confirmation that Nvidia is able to hold both its market share and a steady stream of orders," says Alec Young, chief investment strategist at Mapsignals.

Risks remain high for the entire market. As analyst Luke Rahbari of Equity Armor Investments summarizes, "If Nvidia sneezes, everyone else catches a cold."

Nvidia is not alone in this bear trap: the entire Magnificent Seven (Mag7) group is showing signs of market fatigue, Bloomberg reports. Despite their status as the main drivers of the stock market in recent years, today the IT giants are actually treading water. The Bloomberg index, which tracks this group, has lost almost 1% since the beginning of the fourth quarter, lagging behind the S&P 500.

Mixed Big Tech reports heightened wariness, with Microsoft shares falling after a strong report as investors fixated on slowing growth in its Azure cloud business and record forecasts for spending on AI infrastructure, Bloomberg recalls.

This article was AI-translated and verified by a human editor