US Stock Market Tumbles—Can Nvidia Earnings Spark a Rebound?

Tech Sell-Off, Inflation Concerns, and AI Competition Shake Investor Confidence

The US stock market is under pressure as trade tensions, inflation fears, and AI disruption weigh on investor sentiment. Major indices like the S&P 500 and Nasdaq 100 have slipped between 3% and 4%, erasing gains from late 2024.

While some sectors like healthcare and retail have shown resilience, technology and finance stocks are bearing the brunt of the downturn.

Tech Giants Lead the Decline

So far in 2025, several top tech stocks have suffered significant losses:

• Microsoft & Amazon: Down 5.7%
• Google & Nvidia (NASDAQ: NVDA): Down 7%
• Tesla & Axon: Down around 20%
• 40% of Nasdaq 100 stocks have posted declines in 2025

Despite a strong 2024, the sudden reversal has sparked investor concern. The latest trigger? The rise of AI competitor DeepSeek, which threatens Nvidia’s dominance in the semiconductor space.

All Eyes on Nvidia’s Q4 Earnings Report

Investors are anxiously awaiting Nvidia’s Q4 earnings report (due today, February 26) to see if the AI chip leader can beat market expectations and stop the bleeding.

• Analysts expect 72% revenue growth year-over-year
• Earnings per share (EPS) projected to rise 63%
• Despite recent losses, Nvidia’s stock is still up 60% over the past year

However, after briefly becoming the world’s most valuable company, Nvidia has lost ground to Apple in 2025. Apple’s resilience has fuelled speculation that it may be the only major US tech firm keeping the AI-driven market boom alive.

Market Outlook: Where Do Investors Go From Here?

If Nvidia disappoints, it could deepen the current market sell-off and send shockwaves through tech stocks.

Several key market players have already signalled caution:

• Warren Buffett is holding record cash reserves, possibly bracing for a downturn.
• Howard Marks (Oaktree Capital) has warned of a potential market correction.
• Economist Julia Coronado cites risks like slowing economic growth, sticky inflation, and geopolitical uncertainty as red flags for 2025.

Is There Any Good News?

Not all analysts are bearish:

• BlackRock’s Tony DeSpirito remains optimistic about moderate gains in 2025.
• Goldman Sachs has raised its GDP growth forecast, citing strong consumer spending and a healthy job market.
• Morgan Stanley predicts AI-driven productivity gains will help stabilize the market.

What’s Next for Investors?

For now, the US stock market is at a tipping point. Nvidia’s earnings report could determine whether the current downturn stabilizes—or accelerates.

Should You Buy, Hold, or Stay on the Sidelines?

• If Nvidia exceeds expectations, it may provide a short-term boost to AI and tech stocks.
• If earnings disappoint, further volatility is likely across the entire market.
• Conservative investors may consider holding cash or rotating into defensive sectors like healthcare, utilities, or dividend-paying stocks.
• Those with a long-term perspective may see this dip as a buying opportunity for quality stocks at lower prices.

Bottom Line

The next few days will be critical for investors. If Nvidia’s earnings reassure the market, stocks could stabilize. But if growth concerns persist, the current sell-off could deepen, forcing investors to rethink their portfolios.

For now, the best strategy may be caution, diversification, and patience until the dust settles.

Sources: (Motleyfool.co.uk)