Artificial intelligence (AI) adoption continues at a rapid pace, but some are waiting for the other shoe to drop. A strengthening U.S. economy and robust quarterly results from several AI-related companies helped drive the increase Nasdaq Composite to a new record last week. Still, these same factors have some investors wondering whether the bull market has gone too far, too fast.
A lot is riding on Nvidia’s upcoming financial report, and many shareholders are wondering whether the stock can potentially continue its breathtaking run. Is it worth buying shares ahead of the financial report on November 20? Fortunately for investors, data is starting to pile up that can help answer this question.
The key to Nvidia’s astonishing successes in recent years has been the performance of its graphics processing units (GPUs), which are the best chips for delivering the specific type of computing power needed for generative AI, as well as other types of cloud systems. computer needs. The necessary resources and sheer volume of data involved limit top-level AI models to the world’s largest technology companies and cloud providers – most of which are Nvidia customers. Commentary combined with the recent quarterly results from these tech giants offer some insights into the state of the AI revolution – and the evidence is clear.
The three major cloud providers are rounded up Amazon (NASDAQ: AMZN). During the Q3 call, CEO Andy Jassy called generative a “perhaps unique opportunity… we’re aggressively pursuing it.” Putting that into context, CFO Brian Olsavsky said Amazon’s investments this year would be about $75 billion, much of which would go to cloud computing and AI infrastructure. The company also said it would unveil “100 new cloud infrastructure and AI capabilities” at AWS re:Invent later this month.
Finally there is Metaplatforms (NASDAQ: META). Although not a cloud provider, the company’s social media sites attract 3.29 billion people every day, giving Meta vast amounts of user data. The company raised its full-year capital expenditure outlook to around $39 billion, and CFO Susan Li said: “We continue to expect significant capital expenditure growth through 2025.” She previously noted that this is “to support our AI research and product development efforts.”
The trend of accelerating investments to support the growing demand for AI is clear. Furthermore, much of that money will be spent on the data centers and servers required for cloud computing – where the majority of generative AI software lives. As such, Nvidia will likely be the recipient of much of this spending.
Nvidia has historically been tight-lipped about its biggest customers, but that hasn’t stopped Wall Street from doing some investigating. Analysts from Bloomberg and Barclays Research crunched the numbers and concluded that Nvidia’s four largest customers – which generate a combined 40% of revenue – are:
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Microsoft: 15%
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Metaplatforms: 13%
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Amazon: 6.2%
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Alphabet: 5.8%
Each of these companies has left no doubt about their plans to invest heavily in capital expenditures, and in particular spend heavily on infrastructure to support their cloud computing and AI ambitions. As a leading provider of data center GPUs, Nvidia will likely remain at the top of the list of beneficiaries of that spending.
Nvidia will announce its next set of quarterly results on November 20. After delivering triple-digit annualized growth for five consecutive quarters, the company has tried to rein in market expectations, suggesting that revenue growth this time will only be around 79%. While that would be a slowdown, it would at least still be notable growth.
Investors looking to make money over the next three weeks may be disappointed. No one can say for sure how Nvidia stock will react to the report, even if the company beats expectations.
As a reminder of the problems associated with short-term forecasting, investors need only look back to this summer, when Nvidia stock lost as much as 27% of its value from mid-June on fears that the next generation of Blackwell AI processors would be delayed – only to come roaring back again. It was an illustration that with this stock, volatility is part of the price of admission. That said, both the comments from the big tech customers and their historical spending patterns suggest that Nvidia still has strong growth ahead of it.
For investors looking for stocks they can hold for years and decades rather than weeks and months, Nvidia is a clear choice to benefit from the AI revolution. And with a share price of roughly 32 times next year’s earnings, it is still attractively priced. I can’t say for sure what the stock will do between now and November 20th. What I can say – with a fair degree of confidence – is that investors who buy Nvidia stock soon and hold it for three to five years or more will be more than happy they did.
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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. Danny Vena has positions in Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia. The Motley Fool holds positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia. 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.
Should You Buy Nvidia Stock Before November 20? The evidence is piling up, and here’s what it suggests. was originally published by The Motley Fool
