Even though it’s only half over, November has already been a busy month. In addition to the US presidential election and a Federal Reserve meeting that included another cut in primary lending rates, companies across all sectors have reported third-quarter profits in recent weeks.
But the hustle and bustle of the month is far from over. November 20 is another important date, especially for semiconductor stocks Nvidia (NASDAQ: NVDA)as it reported third-quarter earnings at the time. Here’s why I think the stock will rise after the report and my reasoning for my recommendation on what you should do if you’re considering buying it. Is it a purchase? Read on to find out.
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As an investor in many technology stocks, I’ve spent a lot of time in recent weeks scouring earnings reports for artificial intelligence (AI) companies. The first stocks I analyzed were the “Magnificent Seven” — Microsoft, Alphabet, Apple, Metaplatforms, Amazon, Teslaand (of course) Nvidia.
The only Magnificent Seven member not yet to report a profit this season is Nvidia. That will change this week. With Nvidia set to release third-quarter results on November 20, all eyes will be on the AI darling’s progress.
The chart below illustrates the movements in Nvidia’s stock price between November 2022 and November 2024. The line in the chart is annotated and also includes Nvidia’s earnings reports, which are represented by the purple circles.
The idea above is that Nvidia stock has risen significantly over the past two years. A share price return of almost 1,000% in just two years is not the status quo. It is clear that the AI story has played a major role in Nvidia’s share price gains in recent years.
The bigger idea I want to emphasize, though, is that there is usually notable volatility in Nvidia stock leading up to earnings. This upcoming report is no different: between November 1 and 13, Nvidia shares rose 8%. That’s a pretty big step in the space of two weeks.
If history is any indication, I’d say there’s more than an equal chance of Nvidia stock rising after next week’s earnings report. The stakes are high for this particular report, and I caution investors against getting caught up in momentum-driven narratives.
One of my beliefs about Nvidia’s earnings report next week is that few investors will put much stock in the company’s third-quarter results. Rather, I think the vast majority of investors will focus on one thing: future guidance.
In particular, Wall Street analysts will be updated on the progress of Nvidia’s upcoming launch of the Blackwell GPU architecture. So far, the whole story surrounding Blackwell has been nothing but positive – with some reporting that next year’s new chipsets have already sold out.
However, there have been some recent financial problems Super microcomputer could grow into a bigger problem for Nvidia. Following a series of disruptions at Supermicro, rumors are swirling that Nvidia is diverting Blackwell orders away from its main partner in favor of other IT infrastructure specialists. These are just rumors and hopefully more will be learned from the report or conference call that follows its release.
I don’t have a crystal ball that can tell me how Nvidia stock will move after the company reports earnings next week. On the one hand, it is common knowledge at this point that demand for Blackwell is skyrocketing. Morgan Stanley even forecasts $10 billion in sales from the new product by the end of the year. To put that number in perspective, Nvidia barely generated $10 billion in revenue for the entire year in 2020.
If investors learn next week that Blackwell is going according to plan, I suspect there will be a positive reaction reflected in the stock price. If Blackwell guidance happens to exceed expectations, watch out: Nvidia stock could shoot to a new high.
But having said all this, I am wary that a decision to leave Supermicro may have come too late. While I’m not too concerned about Blackwell’s long-term success, I think any short-term headwinds from Nvidia could provide an opening for competition. If I’m right, Nvidia could face an unwanted bump in the supply chain, which could take a toll on its near-term growth prospects and result in a stock sell-off.
Ultimately, while I remain optimistic about Nvidia’s report next week, I would encourage investors to stay on the sidelines, especially considering how much the stock is already moving ahead of the earnings call.
There is simply too much riding on this report and not enough concrete information about Blackwell has been released. I think buying Nvidia stock ahead of next week’s report is a move more suited to a day trader than a long-term investor.
Consider the following before buying shares in Nvidia:
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. The Motley Fool holds positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
Prediction: Nvidia Stock to Rise After November 20 was originally published by The Motley Fool
