Amazon, Microsoft, Alphabet, and Meta Just Gave Nvidia Great News. But Does That Make The Stock A Buy Before Feb. 26?

The Motley Fool
Updated
Mitrade
coverImg
Source: DepositPhotos

The stock market appears to be in the middle of quite the storm as of late. In the final days of January, a Chinese start-up called DeepSeek sent shock waves around the world after it released an artificial intelligence (AI) model similar to ChatGPT -- and claims to have trained its AI with legacy architectures that aren't widely leveraged by U.S. developers.


While technology stocks in general have been more volatile since DeepSeek's arrival, none has taken a hit as hard as Nvidia (NASDAQ: NVDA). Investors are panicking that Nvidia's newer chipware may not be as much of a necessity, given DeepSeek's claims.


Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. 


Although the uncertainty surrounding Nvidia's future prospects is disorienting, some of the company's biggest partners have been dropping clues as to how DeepSeek is influencing their own AI roadmaps. I'll analyze what these trends are and assess how they might impact Nvidia.


Examining big tech's AI infrastructure plans


Nvidia makes its fortune primarily through its compute and networking business, which sells advanced chipsets called graphics processing units (GPUs). GPUs are integral for generative AI applications, and are primarily housed in large data centers.


While DeepSeek claims to have built its AI using Nvidia's old H800 GPUs, it's been difficult to verify how accurate that is. Nevertheless, all of Nvidia's "Magnificent Seven" peers have reported earnings for the full calendar year 2024, and there is a common thread stitching their broader AI fabric together.

Microsoft kicked things off by announcing the company will be spending $80 billion this year on data centers and other AI infrastructure projects. Meta Platforms followed up with its own aggressive spending plans -- hinting that the company could see capital expenditures (capex) up to $65 billion this year. Lastly, Alphabet and Amazon are projected to spend an estimated $180 billion combined on AI capex this year.


On the surface, big tech's rising capex plans this year should be seen as a positive thing for Nvidia. However, when Nvidia reports earnings on Feb. 26, there is one thing in particular I think investors need to be laser-focused on.


Two people working inside of a data center.

Image source: Getty Images.


What should investors be looking for when Nvidia reports earnings?


Investors should listen carefully to management's commentary as it relates to the spending from big tech I outlined. While Nvidia isn't going to capture all of this spend, investors should still be able to get a glimpse into how much capex the Magnificent Seven will be allocating toward Nvidia.


In my eyes, the best way to figure this out is to look at Nvidia's financial guidance. If the company's growth rates are accelerating, I'd say this is a good proxy that big tech will be spending heavily on Nvidia's newest chip architectures this year. But on the flip side, if Nvidia's guidance calls for a material deceleration in growth, it could be that its biggest customers are still buying from Nvidia, but doing so in a more protracted way.


Is Nvidia stock a buy before Feb. 26?


It's rare that I encourage timing an investment. As long-term investors, buying stock on a specific day isn't the most important factor. Rather, it's more important to reassess your conviction in your holdings, and so long as you remain optimistic, using a strategy of dollar-cost averaging over the course of many years is generally a recipe for success.


This is a rare occasion where I think buying the dip in Nvidia prior to earnings could be a good formula.

NVDA Chart

NVDA data by YCharts


Considering history suggests that Nvidia stock will indeed rise following its fourth-quarter earnings, combined with big tech's capex plans just for this year, and the share price recovery from the DeepSeek sell-off pictured, I'm cautiously optimistic that Nvidia stock is a lucrative opportunity right now.


Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $360,040!*

  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,374!*

  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $570,894!


* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

goTop
quote
Do you find this article useful?
Related Articles
placeholder
Asian stocks edge higher as major Wall Street indexes remain mostly unchangedAsian stock markets climbed on Tuesday, extending a calm stretch for investors even as talk of more U.S. tariffs kept worries about global trade in the air.  Traders in the region took their cue from Wall Street, where major indexes finished Monday almost unchanged ahead of a heavy week of earnings reports and economic figures […]
Author  Cryptopolitan
Yesterday 05: 46
Asian stock markets climbed on Tuesday, extending a calm stretch for investors even as talk of more U.S. tariffs kept worries about global trade in the air.  Traders in the region took their cue from Wall Street, where major indexes finished Monday almost unchanged ahead of a heavy week of earnings reports and economic figures […]
placeholder
What Wall Street expects from Warren Buffett’s Berkshire Hathaway earningsWall Street is already laying its bets on Berkshire Hathaway before the company releases its first-quarter earnings on May 2. According to a CNBC report on Monday, UBS analyst Brian Meredith is pushing even harder on the company’s Class B stock, calling the so-called “Baby Berkshire” a “safe haven in a turbulent environment.”
Author  Cryptopolitan
Yesterday 02: 47
Wall Street is already laying its bets on Berkshire Hathaway before the company releases its first-quarter earnings on May 2. According to a CNBC report on Monday, UBS analyst Brian Meredith is pushing even harder on the company’s Class B stock, calling the so-called “Baby Berkshire” a “safe haven in a turbulent environment.”
placeholder
3 Beaten-Down Growth Stocks to Consider Buying Now​Growth stocks have taken a serious beating in 2025—and even the strongest names haven't been spared. That’s been down to the uncertainty surrounding President Trump’s tariff war and the fears of recession.
Author  TradingKey
Yesterday 02: 25
​Growth stocks have taken a serious beating in 2025—and even the strongest names haven't been spared. That’s been down to the uncertainty surrounding President Trump’s tariff war and the fears of recession.
placeholder
The Mag 7 have lost their touch – Wall Street might need some new bloodThe Magnificent 7 are falling apart, and Wall Street needs new players to fill the gap. That’s the state of things right now, as the top seven tech names—Microsoft, Apple, Alphabet, Tesla, Amazon, Nvidia, and Meta Platforms—fail to carry the market the way they did in the past.
Author  Cryptopolitan
Apr 25, Fri
The Magnificent 7 are falling apart, and Wall Street needs new players to fill the gap. That’s the state of things right now, as the top seven tech names—Microsoft, Apple, Alphabet, Tesla, Amazon, Nvidia, and Meta Platforms—fail to carry the market the way they did in the past.
placeholder
Elon Musk says he’s ready to leave DOGE next month, Tesla stock surges in anticipationSpeaking during Tesla’s earnings call, Elon confirmed that his work at President Donald Trump’s Department of Government Efficiency (DOGE) will drop “significantly” by next month. The company’s stock shot up nearly 5% in after-hours trading.
Author  Cryptopolitan
Apr 23, Wed
Speaking during Tesla’s earnings call, Elon confirmed that his work at President Donald Trump’s Department of Government Efficiency (DOGE) will drop “significantly” by next month. The company’s stock shot up nearly 5% in after-hours trading.
Real-time Quote