Earnings Season Ends Next Week with Nvidia

Commentary

As the fourth-quarter 2025 earnings announcement season winds down, Nvidia (NVDA), as usual, will provide the grand finale with its report scheduled for February 25. In the wake of Super Micro Computer’s (SMCI) news of 123% sales growth, Nvidia is expected to dazzle the investment world once again. Their outlook remains solid, as the Vera Rubin GPUs are five times more powerful and 10 times more energy efficient than other chips.

Taiwan Semiconductor (TSM) gave us another clue about tech earnings when it reported January sales up 37%, its fastest growth rate in several months, and well above its 2026 guidance for 30% sales growth. TSM makes high-end chips for Microsoft Surface laptops, Apple computers, and Nvidia’s GPUs, so this strong sales growth tells us the AI boom is accelerating, which bodes well for Nvidia’s guidance.

Here are the most important developments recently and what they mean:

– I was at Mar-a-Lago for dinner last Friday night, and I had the opportunity to chat with Commerce Secretary Howard Lutnick. I told Howard that Maria Bartiromo was very kind to repeat my 5% GDP prediction back in December, but then Howard raised the bar to 6%, only for us to be upstaged this past week by President Trump’s 15% growth prediction. We briefly discussed how 15% is a high bar, but Howard reassured me that 6% GDP growth this year is very possible.

– I think it is important to try to explain how 15% GDP growth might be possible, even if it is a “moonshot” projection by President Trump. Up to 8% GDP productivity gains are possible via AI, while up to 4% GDP gains are possible if exports continue to soar and imports remain low. Finally, 3% GDP growth is possible from robust consumer spending as soon as consumers cheer up and realize that they have more money in their pockets from the tax cuts. So, 8% + 4% + 3% = 15% GDP, but that is only possible in a perfect economic scenario. I must add that the housing market, especially residential investment, remains a drag on GDP growth, so it is imperative that the housing sector firms up fast.

– Treasury yields declined in the wake of the announcement that the Consumer Price Index (CPI) is now running at only a 2.4% annual pace, so the speculation of another Fed key interest rate cut is likely. However, Kevin Warsh does not take over until May if he is confirmed by the Senate. Since Warsh has called for a closer relationship between the Fed and the Treasury Department, it is raising speculation that yield curve management and open market actions by the Fed would apparently be coordinated between the Fed and the Treasury Department.

– There is a rift between France and Germany that is destabilizing the EU. However, Germany and Italy have formed an alliance near-term, since their respective manufacturing industries do business with each other. Poland is the star in the EU with robust economic growth. Ironically, a Polish representative at the Munich Security Conference disagreed with the U.S. policy on the EU’s Net Zero goal, which is a bit ironic since Poland burns a lot of coal for electricity. However, Poland’s cheaper electricity is helping it grow, so maybe that is why it likes the EU’s oppressive emission rules, since in the end, it helps divert manufacturing to Poland.

– The Wall Street Journal described the relationship between the U.S. and Europe as a “Marriage of Convenience.” Despite Secretary of State Marco Rubio’s warmer tone at the Munich Security Conference that was very respectful of European disagreements, the fact that Europe has been excluded from the Ukraine/Russian negotiations, plus the U.S. quest to buy Greenland from Denmark, still has many European allies grumbling. In the end, the conference was a success, especially for Secretary of State Rubio.

– Iran has apparently proposed a pause in uranium enrichment and even proposed possible business deals with the U.S. Naturally, this is not what the U.S. wants in its negotiations with Iran. President Trump said, “I don’t think they want the consequences of not making a deal,” and added, “They want to make a deal.” Due to the perception of some progress, gold prices have moderated a bit, even though any final deal between Iran and the U.S. is unlikely at this time.

Overall, market volatility remains high. The situations in Ukraine and Gaza are showing little progress, while the risks of military action in Iran appear to be rising. Nevertheless, fundamentals remain strong, with GDP expected to be as high as 6% in 2026. It is likely that we will look back on the current volatility as a buying opportunity.

*Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.