Nvidia (NASDAQ: NVDA) has proven to be an excellent investment in the short and long term. The share has risen by 2,700% in five years and is heading for an increase of almost 200% this year.
The reason behind this is simple: Nvidia has built an artificial intelligence (AI) empire, serving one of the fastest growing fields today. The current $200 billion AI market is expected to reach $1 trillion by the end of the decade. As this growth takes place, Nvidia could be one of the biggest winners.
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The tech company’s dominance in AI chips and related products and services has helped it post triple-digit revenue growth and solid gross margins in recent times. However, if you haven’t joined Nvidia yet, you might be wondering if now (in anticipation of its upcoming earnings report) is a good time to invest in this popular stock. Below are two reasons to buy Nvidia before the November 20 report – and one reason to wait.
Nvidia is heading into a big moment, and the company will likely give us an update next week during its third-quarter fiscal 2025 earnings report. The tech powerhouse will launch its new Blackwell architecture and best-performing chip ever in the fourth quarter. The goal is to ramp up production and generate billions of dollars in revenue during this period, Nvidia said during its latest earnings report in August.
The tech giant also said at the time that demand for Blackwell was exceeding supply, and this is expected to continue next year. This tells us that customers are flocking to Nvidia for the new platform – and even willing to wait for it.
The company has offered updates on the Blackwell launch during previous earnings reports this year, so as we approach the key moment, we’ll likely learn more about this important new release. Given the forecast of billions in revenue from the very first quarter of commercialization, there is reason to be optimistic about Blackwell as a new growth engine for Nvidia.
If this top AI player offers us confirmation of these points – and possibly additional positive details – the stock could rise after November 20.
Nvidia isn’t the cheapest stock on the market, trading today at more than 50x forward earnings estimates. But it’s important to put this into perspective. For a growth stock involved in AI, it is also not the most expensive stock. Software company Palantir Technologies and cybersecurity giant CrowdStrike for example, both are trading at much higher levels by the same metric.
Nvidia actually looks reasonably priced at current levels when you consider both its track record and the potential for earnings growth in the coming years. As mentioned, sales have increased dramatically and a gross margin of more than 70% indicates solid profitability on sales. Going forward, growth in the AI market, Nvidia’s position as a leader, and the company’s focus on innovation to stay ahead should drive profits higher.
Potentially good news from Nvidia on November 20 could push the stock higher, boosting its valuation as well. All of this makes Nvidia look like a great long-term growth stock to get into at its current price.
Nvidia is a great buy today as it is reasonably priced given its outlook, and may get a boost from positive news about Blackwell during its upcoming earnings report. However, long-term investors don’t need to rush into investing in a particular stock to take advantage of a potential short-term move.
This is because stock performance over a period of a few days or weeks does not have much impact on returns if a stock is held for five years or more. This is great news because you don’t have to worry about market timing or feel disappointed if you miss out on a certain period of profit. If the company is solid and has good long-term prospects, there will be positive share price performance over time.
All this means there are now some good reasons to buy Nvidia ahead of its earnings report. However, if you prefer to wait (or need to wait before freeing up money to invest), don’t worry. Investing after the report or even later can yield big returns for your portfolio in the long run.
Consider the following before buying shares in Nvidia:
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Adria Cimino has no positions in the stocks mentioned. The Motley Fool holds positions in and recommends CrowdStrike, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
2 Reasons to Buy Nvidia Before November 20 and 1 Reason to Wait was originally published by The Motley Fool
