Nvidia will have to show more than good reports to impress investors

When every quarter, technology giants like Meta, Google and Amazon only update their capital expenditure section upwards, multiplying it annually by 1.5-2 times, there is no scenario in which Nvidia does not continue to grow in the short term. But the investors, apparently, have already gotten used to this reality, and also the presentation of the company’s performance on Wednesday – an event that in recent years has become one of the most watched and talked about – causes a yawn among investors. Thus, after announcing a jump in the company’s revenues last November, the stock fell by more than 3% during the trading day.

The stock is falling

This is also reflected in the share price: Nvidia is one of the most stagnant stocks among the technology giants, and after the last two financial reports its share actually went down. In the last half of the year, it barely rose by 9%, and since the beginning of the year it has been hovering around a 1-2% increase, a figure that is only slightly improved compared to the Nasdaq or the S&P 500. For comparison, in the last six months, Google’s stock rose by 57%, Broadcom rose by 14%, and even the stock of its direct competitor AMD, which suffered a significant collapse about two weeks ago, overtook Nvidia during the last six months This year, with a 21% increase.

“The assumption in the market is that the reports are expected to be good, but it is not clear how much this will affect the stock, which has been stuck for a long time, and whether it will be able to maintain its market share,” says Nir Orgad, an analyst of foreign stocks in the advisory system at Bank Leumi.

“When the company stands at its peak in terms of market share for such a long time, from here it is mostly possible to go down. On the other hand, there are attempts by companies such as AMD, Amazon and Google-Broadcom to penetrate the graphics processor market, and at the same time, there is an understanding on the part of the giant’s customers that artificial intelligence is progressing from the era of training to the era of operating models, and this will also enable the operation of cheaper, dedicated and more energy efficient graphics processors.”

The weight: OpenAI

One of the weights weighing on Nvidia and its stock is the deep commitment to OpenAI, Sam Altman’s artificial intelligence giant, which launched the AI ​​era with its ChatGPT engine, but has been gaining negative momentum in the last year – financially and image-wise. It seems that the market has already stopped counting how many times Nvidia’s CEO, Jensen Huang, has been required to put his hand in the company’s pocket and invest more and more in the artificial intelligence company. In recent days, news has been published about an infusion of $30 million from Nvidia to OpenAI, after only two months ago it was announced that the company intends to raise $100 billion. in building server farms and recruiting AI experts.

Although OpenAI announced at the beginning of the year a 250% increase in revenue to 20 billion dollars in 2025, it worried the market by not publishing its expenses, which are estimated at hundreds of billions of dollars. It predicts that it will reach profitability only at the end of the decade, an assessment that is already being questioned by some.

Also from the image aspect, OpenAI suffers from a relative disadvantage, when last November its products were overshadowed by the launch of Gemini 3, which garnered returns from users and analysts, and in recent months, the main player that arouses discourse is Anthropic, which works mainly with Amazon and Google processors, which becomes the dominant software development engine in companies, at the expense of OpenAI. Recently, it has also been causing a stir among software and cyber stocks thanks to its development products.

Like Anthropic, OpenAI also launched a competing cyber engine already a month ago, under the name AardVark, but it did not receive any real attention from investors and did not generate much public interest. Nvidia, which is associated with the group of companies surrounding OpenAI, which also includes Oracle, Microsoft and Coruve, suffers, like the other two, from its chilling effect.

Under the radar deals

On the other hand, Nvidia managed to generate positive momentum when it announced a huge deal to supply graphics processors to Meta. This was done in response to the publication of the leak from the De Information website, as if Meta was close to signing such an agreement with the competitor Google. The agreement, whose details and contents have not been published, is an apparent victory for Nvidia, which managed to keep one of the big tech giants in its fold. And at the same time, it is difficult to understand whether it was a conservation deal for which she was forced to compromise on price.

Despite the high profile of Nvidia and the field of artificial intelligence – all transactions for the purchase of graphic processors remain under the radar – so the information on the price of the chips is not available to the public and varies according to the nature of the transaction. “If Nvidia had to make deals to retain customers so that they would not spill over to competitors, we can see it in its gross profit margins, which showed a very slight decrease,” Orgad says.

Nvidia maintains a gross profitability that ranges between 74% and 75%, a very high profitability that shows its monopolistic position in the graphics processor market, when the publication of a figure lower than this would prove that the price war is starting to take place.

Nvidia’s stock has been faltering for months, and on the other hand, the consensus among analysts regarding its target price is quite high, standing at $260, compared to a share price of $190. Its forward earnings multiple is only 29, which may be interpreted as a buying opportunity. “The low multiplier is related to the fear and the question of where the market will be in two or three years – it mainly stems from the fear of being “stuck” with Nvidia stock in an environment where the line straightens and the growth areas are more neutral. On the other hand, it may be that in order to maintain market share Nvidia will have to sacrifice its profit margin, and there is also a question as to how sustainable this is in the long term,” Orgad says.

“Therefore, one can understand investors who diversify their investment baskets with indices in which Nvidia’s weight is more balanced with that of other chip companies. The lower the level of expectations is ahead of the investors’ call on Wednesday night, the more radical the trend change may be if the company’s CEO is pleasantly surprised during it.”