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What Microsoft’s (MSFT) Data Center Spending Cuts Mean For Nvidia (NVDA)

The most anticipated earnings report of the quarter is just around the corner. Nvidia is set to announce its earnings report on the 26th of February, with many expecting an earnings beat on both the top line and the bottom line. We still don’t know if there will be any substantial impact from the delay in the Blackwell line of GPUs and whether the company has started shipping it out at scale. However, there are now fears that the product may not be as in demand as initially expected.

TD Cowen came out with an analyst note stating Microsoft has canceled data center leaders with at least two operators and is scaling back international spending. This is going to spook investors as the company was expected to be the biggest AI infrastructure spender in 2025. The fact that Microsoft was Nvidia’s largest customer in terms of GPUs bought in 2024 means the development is significant. Even if it doesn’t immediately impact the Nvidia earnings, it will dampen the optimism heading into the earnings and possibly result in EPS revisions, especially if the Nvidia earnings surprise to the downside.

The Windows software maker has also walked away from multiple data center deals while letting over 1 gigawatt worth of deals expire. This could all of course be just business as usual and small delays instead of outright cancellation. Microsoft was quick to clarify that the company’s plans of spending $80 billion in 2025 are still on. This would settle some nerves among investors but the fear has already set in and may creep into Nvidia’s earnings lead-up.

Nvidia is expected to post an EPS of $0.85 on revenue of just over $38 billion. While future GPU demand isn’t a concern for now, there are question marks over the company’s ability to deliver Blackwell GPUs in time. KeyBanc analysts are confident of the company’s ability to get over these issues and deliver strong earnings and guidance:

Despite prior concerns regarding constraints associated with the ramp of GB200 NVL servers, we expect NVDA to report strong F4Q results, which we anticipate will solidly beat, and to guide F1Q conservatively and moderately higher than consensus.

Some customers have increased their orders of H20 GPUs while they wait for the company to resolve the Blackwell GPU execution issues. If that’s the case, the company may be able to withstand any negative effects of the delay and report both a strong quarter and a strong guidance.

Nvidia is 5th on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 223 hedge fund portfolios held NVDA at the end of the fourth quarter which was 193 in the previous quarter. While we acknowledge the potential of NVDA as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article was originally published at Insider Monkey.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors.

What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

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Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

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