Nvidia (NVDA) is set to release its fourth-quarter fiscal 2026 results on February 25, and the report may show if the recent AI rally can hold. The stock has risen about 46% over the past year on strong demand for its data-center chips. Investors now want clearer signs that this growth can continue. Bulls expect a strong outlook as Blackwell production ramps, while bears worry about margins, China export limits, supply constraints, and rising competition.
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What’s Driving the Bullish Case Into Earnings?
1. AI Spending from Cloud Giants Remains Strong: Major cloud companies such as Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOGL) continue to raise AI infrastructure spending. In their latest earnings calls, each company highlighted plans to increase capital spending to build AI data centers and capacity. Bulls believe Nvidia remains the main supplier of AI accelerators, supporting continued data-center revenue growth.
2. Meta Partnership Adds Visibility: The recently expanded multiyear AI infrastructure partnership with Meta (META) signals sustained demand for large AI clusters. Bulls view this as evidence that hyperscaler investment in AI is not slowing. In a new note, Stifel kept a Buy rating and said the deal shows Meta’s growing reliance on Nvidia’s full-stack AI systems, including GPUs and networking.
3. Blackwell Ramp Could Drive the Next Leg Higher: Investors expect shipments of the new Blackwell GPUs to begin scaling this year. Bulls say the new platform should bring another upgrade cycle for customers and could extend Nvidia’s growth into 2026.
4. Wall Street Analysts Remain Positive: Wall Street continues to rate the stock a Strong Buy, pointing to Nvidia’s dominant position in AI computing and its software ecosystem advantage. Strong forward guidance, rather than the reported quarter itself, is seen as the key upside catalyst. UBS recently raised its price target to $245 and said supply-chain checks remain healthy, while Goldman expects another revenue and earnings beat driven by hyperscaler spending.
Why Some See Limited Upside
1. China Restrictions Could Affect Guidance: Nvidia’s advanced GPUs remain subject to U.S. export controls to China, a market that previously contributed meaningful data-center revenue. Bears worry the company may exclude China sales from forward guidance, which could lower growth expectations even if the quarterly results are strong.
2. Investors Are Closely Watching Gross Margins: Rising high-bandwidth memory (HBM) costs, a critical component in AI accelerators, along with potential export-related expenses could push margins below the mid-70% range Wall Street expects. A margin decline would likely weigh on the stock.
3. Rising Competition from Cloud Customers: Major hyperscalers are increasingly developing their own AI chips and optimizing workloads. While Nvidia still dominates AI training, bears argue growing in-house solutions at large cloud companies could gradually limit future pricing power and growth.
4. High Expectations Leave Little Room for Error: After a massive multi-year rally, expectations are extremely high heading into earnings. Bears believe the stock may react more to forward guidance than reported results, meaning even a modestly cautious outlook could trigger volatility.
Key Numbers to Watch in Q4 Earnings
According to Wall Street estimates, Nvidia is expected to post adjusted earnings per share (EPS) of $1.52, up nearly 71% from the year-ago figure of $0.89. Moreover, sales are expected to jump 68% year-over-year to $65.67 billion.
For full-year fiscal 2026, sales are projected at $213.3 billion and adjusted earnings at $4.69 per share.
Is Nvidia a Good Stock to Buy?
On TipRanks, Nvidia stock commands a Strong Buy consensus rating based on 35 Buys, one Hold, and one Sell rating. The average Nvidia price target of $266.23 implies 40.29% upside potential from current levels.
