Consider these reasons to act on Nvidia before November 20, along with one reason to hold off:
Consider these reasons to act on Nvidia before November 20, along with one reason to hold off:
Nvidia (NVDA) has proven to be a lucrative investment, both in the short and long terms. The stock has skyrocketed an impressive 2,700% in the past five years and is on track for a nearly 200% increase this year.
The primary factor behind this success is Nvidia's dominance in the rapidly growing field of artificial intelligence (AI). The current $200 billion AI market is predicted to reach a staggering $1 trillion by the end of the decade. As this growth continues, Nvidia stands to be one of the significant beneficiaries.
Nvidia's dominance in AI chips and related services has led to triple-digit revenue growth in recent times and impressive gross margin levels. If you haven't yet invested in Nvidia, you might be considering whether now, ahead of the upcoming earnings report on Nov. 20, would be an ideal time. Below are two reasons to buy Nvidia before this report and one reason to wait.
Reason to buy: Anticipated update on Blackwell
Nvidia is nearing a significant milestone, and the company is likely to provide an update during its fiscal 2025 third-quarter earnings report, coming up next week. Nvidia is set to launch its new Blackwell architecture and its most powerful chip ever during the fourth quarter. The company aims to ramp up production and generate billions of dollars in revenue during this period, as mentioned in its last earnings report in August.
Additionally, Nvidia stated during its August report that demand for Blackwell exceeded supply and is expected to continue into the following year. This suggests that customers are eager for the new platform and are even willing to wait for it to become available.
Nvidia has provided updates on the Blackwell launch during past earnings reports this year, and as we approach this critical moment, we can expect more information to be shared. Given the potential for billions in revenue by the first quarter of commercialization, there's a strong case for Blackwell to serve as a new growth driver for Nvidia.
If this AI powerhouse provides confirmation of these points and potentially additional positive details, the stock could experience significant gains following Nov. 20.
Reason to buy: Reasonable valuation for a growth stock
While Nvidia is trading at more than 50x forward earnings estimates currently, it's important to view this in context. For a growth stock focused on AI, it's not among the most expensive options available. Software company Palantir Technologies and cybersecurity giant CrowdStrike, for example, both trade at higher levels using the same measurement.
Nvidia appears to be fairly priced at its current level, taking into account its impressive track record and prospects for strong earnings growth moving forward. Revenue has grown substantially, and a gross margin level of over 70% signifies robust profitability in sales. As the AI market continues to grow, Nvidia's position as a market leader, and its dedication to innovation to stay ahead, are likely to fuel continued earnings growth.
A positive update from Nvidia on Nov. 20 could potentially drive the stock higher, leading to an increase in its valuation. Consequently, Nvidia looks like an excellent long-term growth stock to invest in at its current price.
Reason to wait: The importance of long-term investing and not timing the market
Nvidia is a compelling investment option now due to its reasonable pricing and the possibility of a boost from positive news regarding Blackwell during the upcoming earnings report. However, long-term investors don't need to rush into a particular stock to benefit from potential short-term gains.
Because share performance over a short period of time--a few days or weeks--won't significantly impact long-term returns if a stock is held for five years or more, investors can relax about the timing of their investment. This knowledge frees you from the pressure of trying to time the market and missing out on brief periods of gains. If a company is sound and has promising long-term prospects, positive share price performance will eventually happen.
In summary, there are strong reasons to buy Nvidia before the earnings report, taking place on Nov. 20. However, if you prefer to wait or need to delay your investment due to financial constraints, don't hesitate; an investment following this report can still deliver impressive long-term returns for your portfolio.
Investors considering Nvidia as an investment opportunity might be interested in its strong presence in the rapidly growing AI market, which is predicted to reach $1 trillion by the end of the decade. This growth potential, coupled with Nvidia's dominance in AI chips and services, has led to impressive financial performances.
Furthermore, Nvidia's upcoming earnings report on Nov. 20 might provide valuable insights into its new Blackwell architecture and most powerful chip yet, which could serve as a new growth driver for the company. The anticipated updates on Blackwell's launch and production ramp-up could potentially lead to significant stock gains following the report.