Nvidia's Results Determine The Decree Of The 'Magnificent Seven' Which Is Falling

Nvidia shares rose 2.6% in pre-market trading on Wednesday (photo: dock.nvidia)

JAKARTA - The results of Nvidia's highly anticipated financial audit on Wednesday, February 26, which is seen as a barometer of demand for AI chips. This report can be a turning point for technology stocks amid data center spending savings by technology companies.

Investors have made a huge fortune in recent years from the AI boom, which mainly benefits the "Magnificent Seven", a tech giant group that includes Nvidia, Microsoft, and Tesla.

The rally continues despite growing concerns over high stock valuations and whether billions of dollars in investment will result in significant profits.

These concerns have risen in the past month as several stocks fell, led by Tesla, which slumped 25%, while the S&P 500 outperformed the group this year.

Additional shocks occurred this week after an analyst report stated that Microsoft canceled some of the data center's rentals. Nvidia's own shares have fallen nearly 6% in that period, exacerbated by concerns over the low cost of China's DeepSek AI model.

"Nvidia has a tough task to bring back market sentiment this week. If it fails, the stock sell action can be faster," said Ipek Ozkardeskaya, market analyst from Swiss quote Bank. "Hope rests on Nvidia."

Nevertheless, Nvidia's shares rose 2.6% in pre-market trading on Wednesday, lifting the chip sector and stock index from selling pressure due to grim consumer confidence reports.

As the world's second most valuable company, Nvidia has become the biggest beneficiary of its AI investment trend on Wall Street, adding about 2.7 trillion US dollars to market value since the launch of ChatGPT in November 2022 which is referred to as an "iPhone moment" for AI.

Nvidia's nearly 1,800% spike has made it a leader among the "Magnificent Seven". In the last five years, the average stock in this group has more than tripled, while the S&P 500 index has only increased by about 65%.

However, in 2025, the performance of these stocks has stalled slightly. "Magnificent Seven" fell by about 4.5%, while the other S&P 500 index rose 4.4%" so that the overall index only rose 1%.

The trade option shows Nvidia's possible share movement of 7.7% in one direction after the results were announced, in line with its 7.6% average movement the day after the announcement of the results over the past 12 quarters, according to ORATS analytic services.

Despite the extraordinary rally, Nvidia's share valuation actually fell as profit forecasts increased faster than its share price. Nvidia shares are now trading at a profit-to-profit (P/E) ratio about 28 times, down from 36 years ago and much lower than its peak above 80 in June 2023, according to LSEG data.

Despite experiencing a major rally, Nvidia had a setback in January when DeepSek introduced a lower-cost AI model, which removed $593 billion from its market cap in one day its biggest one-day market value loss in history.

"DeepSeek had rocked investors, but with the advantage of being the first player and big infrastructure investment plans from tech giants like Meta, this indicates that Nvidia's high-end chips will still be in demand," said Susannah Streeter, head of the market and money at Hargreaves Lansdown.