NVIDIA (NVDA) Earnings Today: AI Chip Demand and Dow Jones Impact

• NVIDIA is expected to announce strong Q4 2024 earnings, driven by high demand for GPUs in data centers and AI applications.
• The market is closely watching how NVIDIA's earnings will reflect the demand for AI chips, especially after China's DeepSeek incident.
• Potential challenges for NVIDIA include possible tariffs on chips manufactured in Taiwan (TSMC) and new export restrictions to China.
• Technical analysis suggests the Dow Jones index has found recent support, will Nvidia inspire further gains?

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NVIDIA is set to announce its Q4 2024 earnings today, after market close. Analysts expect strong results, with projected revenue of $38.1 billion, driven by the booming demand for GPUs in data centers and AI applications.

The Data Center segment, in particular, is anticipated to show significant growth, with revenues climbing from $22.2 billion last year to an estimated $34 billion this quarter.

Nvidia’s data center business is expected to make most of its revenue this quarter with the gaming sector expected to bring in around $3 billion.

Source: Yahoo Finance, Company Reports

NVIDIAs earnings release will be closely watched as a measure of demand for AI chips and could be a turning point for AI-related stocks, especially as tech companies cut back on data center spending.

This will also be the first earnings quarterly report since China's DeepSeek caused AI company stocks to drop and wiped $600 billion off Nvidia’s market value in late January. Investors were worried because DeepSeek claimed it built a very powerful model using older, less advanced Nvidia chips, which could reduce demand for Nvidia’s high-end processors.

The impact of DeepSeek should not be underestimated, however NVIDIA CEO Jensen Huang does not see it as a threat.

During an interview, Nvidia CEO Jensen Huang argued the opposite of what was feared. He said using high-powered chips to run models like DeepSeek’s actually gives better results. Huang believes DeepSeek’s models encourage companies to invest more in top-tier processors, not avoid them.

On February 25 a report by Reuters stated that Chinese companies are increasing their orders for Nvidia's H20 AI chip because of growing demand for DeepSeek's low-cost AI models, citing six sources. This would back up Nvidia CEO Jensen Huang's views on the matter and could bode well for Nvidia shares going forward.

Nvidia could face challenges if tariffs are placed on chips made in Taiwan, where its partner TSMC manufactures many of its processors. Additionally, new export restrictions on Nvidia chips sent to China could hurt its revenue from the region.

While most of Nvidia's revenue comes from the U.S. ($14.8 billion in Q3), China is its third-largest market, contributing $5.4 billion, after Singapore's $7.6 billion.

The Dow Jones index has found support recently at a key level around 43400.

Market participants will be hoping for the recent bullish price action to continue with a key resistance level resting at 44451.

A break above this level will bring resistance at 44759 and the psychological 45000 handle into focus.

A slide through the support handle at 43400 could open up a retest of the 2025 lows just below the 42000 handle.

Dow Jones Daily Chart, February 26, 2025

Source: TradingView

Support

• 43400
• 42764
• 42446

Resistance

• 44000
• 44451
• 44759

Looking at Nvidia's performance after earnings releases and the following data points may be pertinent and provide some insights.

Options suggest Nvidia's stock could swing by 7.7% in either direction after the results, similar to its average 7.6% move after past results over the last 12 quarters, according to ORATS.

Source: LSEG

Although Nvidia’s stock value has surged, it’s now trading at a lower premium because earnings estimates have risen faster than the stock price. The stock is currently valued at 28 times expected earnings, compared to 36 a year ago and over 80 at its peak in June 2023, according to LSEG data.

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