Investing in Nvidia: Reasons to Buy Before Earnings Report
Nvidia(NASDAQ: NVDA) has been a remarkable investment, appreciating by 2,700% over the past five years and nearing a 200% increase this year alone. The company’s success is largely attributed to its strong position in the rapidly growing artificial intelligence (AI) market. Currently valued at $200 billion, this sector is expected to reach $1 trillion by the end of the decade, positioning Nvidia as a potential leader in this expansion.
The tech titan’s stronghold in AI chips and related services has enabled it to achieve impressive triple-digit revenue growth and maintain high gross margins. Those contemplating an investment in Nvidia before the upcoming earnings report on November 20 may find valuable insights in the analysis below, which highlights two reasons to invest now, alongside one reason to consider waiting.
Image source: Getty Images.
Buy Now: Anticipation of Blackwell Details
Nvidia stands on the brink of an important announcement during its fiscal 2025 third-quarter earnings report next week. The company is set to unveil its latest Blackwell architecture along with its most powerful chip thus far in the fourth quarter. Nvidia has indicated plans for ramping up production, which could lead to billions in revenue, as mentioned in their last earnings call in August.
The demand for Blackwell is notably exceeding supply, suggesting customers are eagerly awaiting the new platform. This trend is expected to persist into the next year, indicating strong interest in what Nvidia has to offer.
Given Nvidia’s previous updates regarding Blackwell, it’s reasonable to expect more information during this earnings report. If the company confirms its robust revenue forecasts for the initial quarter of commercialization, it could trigger a significant uptick in the stock’s value post-report.
Buy Now: Reasonable Valuation Amid Growth
While Nvidia trades at over 50 times its forward earnings estimates, it’s essential to provide context. Among growth stocks in the AI sector, Nvidia is not the most overvalued. Companies like Palantir Technologies and CrowdStrike have even higher valuation metrics.
NVDA Price-to-Earnings Ratio (Forward) data by YCharts.
Nvidia’s current valuation appears reasonable when weighed against its historical performance and future earnings growth potential. With revenues soaring and a gross margin exceeding 70%, the company is well-positioned to thrive. As Nvidia continues to lead in AI, its focus on innovation is likely to sustain earnings growth.
Favorable news from Nvidia following the earnings report on November 20 could potentially lift the stock price and its valuation, making it an attractive growth investment at present levels.
Consider Waiting: The Long Game of Investing
Nvidia presents a strong buying opportunity now based on its reasonable pricing and potential revenue enhancements, particularly with the news surrounding Blackwell. However, long-term investors may not need to rush decisions based on short-term fluctuations.
Returns from stock performance over a few days or weeks are often negligible for investors holding shares for five years or more. The advantage is that long-term investors can avoid the stresses of market timing and still profit in the long run, provided they invest in solid companies with promising futures like Nvidia.
Thus, while there are compelling arguments for investing in Nvidia now, those considering a wait or needing to free up funds should feel confident that future investments could still yield significant returns.
Should You Invest $1,000 in Nvidia Now?
Before purchasing Nvidia stocks, keep this in mind:
The Motley Fool Stock Advisor analyst team recently named what they believe are the 10 best stocks to buy now… and Nvidia wasn’t included. The selected stocks have the potential to produce substantial returns in the years ahead.
If you had invested $1,000 in Nvidia when it was first recommended on April 15, 2005, that investment would be worth $904,692 today!
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
