Nvidia (NASDAQ: NVDA) is squarely in focus ahead of its fiscal Q4 earnings scheduled for Feb. 25, with analysts calling for the AI darling to grow its revenue by more than 65% year-on-year.
And while some investors believe a strong report from the chip titan will lift all tech stocks, helping temper the ongoing “SaaSpocalypse”, the reality may prove very different.
In fact, a “monster” report from NVDA might just accelerate the software rout in the weeks ahead. Note that Nvidia stock has rallied some 12% heading into its quarterly release on Wednesday.
Why Nvidia earnings may accelerate the software sell-off
Investors have bailed on software stocks this month for two key concerns:
- AI agents will replace the need for “per-seat” software licenses. If artificial intelligence can do the job of 10 people, a business only needs 1 software seat – not 10.
- Companies are, therefore, diverting innovation budgets away from software subscriptions to buy Nvidia chips and build their own AI infrastructure.
Simply put, the better NVDA does, the more it confirms the market’s shift toward “hardware and infrastructure” and away from applications.
Nvidia is expected guide for as much as $75 billion in revenue for its fiscal Q1, representing billions being stolen from enterprise software budgets to pay for Blackwell chips required to run AI.
Essentially, NVDA’s growth relies on companies building AI agents, and these agents are the force investors fear will make conventional SaaS tools obsolete.
In short, a blockbuster report on Feb. 25 will likely be constructive for NVDA stock only – not the entire AI industry.
How to play NVDA shares heading into the Q4 release
Truist’s senior analyst William Stein recommends loading up on Nvidia shares ahead of the giant’s Q4 earnings on Wednesday, after the bell.
He expects the multinational to report a “beat and raise,” and its management to offer “optimistic commentary about products, demand, supply, and long-term drivers.”
According to Stein, the current “infrastructure transformation” is notably different from a typical semiconductor cycle.
While software names are facing a “funding and power” crisis, NVDA remains the prime beneficiary of the rising capital expenditures, he added.
Truist is particularly bullish on the Blackwell ramp, noting these chips are “sold out” through mid-2026, offering a visible floor for revenue growth that software companies just can’t match.
In a research note dated Feb. 24, the investment firm maintained its “buy” rating on NVDA shares, suggesting their PEG ratio of about 0.57 remains attractive relative to the titan’s explosive earnings growth.
Truist currently has a “$275” price objective on the Nasdaq-listed firm – indicating potential upside of nearly 43% from here.
Note that Nvidia also pays a small dividend yield of “0.021%” at the time of writing.
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