Wall St Week Ahead Nvidia to offer AI trades reality check
February 21, 20255:02 PM GMT+6Updated 13 hours ago
NEW YORK, Feb 21 (Reuters) – Nvidia’s (NVDA.O), profit report next week could steer the U.S. stock market’s course, as investors seek confirmation that the AI-driven investment trend, which has powered equities for two years, is intact after last month’s panic-selling triggered by the Chinese startup DeepSeek.
Seen as a bellwether of the burgeoning AI industry, Nvidia is the world’s second most valuable company, with a 6.3% weight on the S&P 500 (.SPX), according to LSEG. Its shares have skyrocketed over 550% over the last two years.
A recent stumble, however, came after the Chinese startup DeepSeek unveiled a lower-cost AI model that was seen as a threat to the dominance of U.S. rivals, driving Nvidia down roughly 17% on January 27, equivalent to $593 billion – a record one-day market value loss.
Shares have almost fully recovered from the tumble and the company said DeepSeek’s advances prove the need for more of its chips, but apprehensive investors fear earnings could revive some market turbulence.
Mike Smith, Allspring’s head of growth equity team, said:
It’s a tough setup going into the conference call next week because there is some anxiety of wanting to kind of call the top on Nvidia. So I would not be surprised to see rotation and fairly violent market reaction under any circumstance,
He said investors could rotate out of AI trades into sectors such as healthcare, software and financials.
Nvidia options imply a 7.7% swing for the shares in either direction following the results, in line with the stock’s average move of 7.6% on the day after results over the last 12 quarters, according to data from options analytics service ORATS.
With the AI chipmaker’s market capitalization hovering around $3.4 trillion, the options-implied stock move equates to a market value swing of about $260 billion, roughly the size of Wells Fargo (WFC.N)
Nvidia is expected to post on February 26 a fourth-quarter profit of $20.89 billion, driven by a roughly 72% rise in revenues from a year earlier, LSEG data showed.
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Wall St Week Ahead Nvidia to offer AI trades reality check, source
