Should You Buy Nvidia Stock Before Nov. 20? Here's What History Suggests

As the artificial intelligence (AI) boom continues, Nvidia (NASDAQ: NVDA) has emerged as a dominant player in the AI chip market, with an 80% share. With the company's third-quarter earnings report scheduled for Nov. 20, investors are wondering if now is the right time to buy Nvidia stock. To make an informed decision, let's examine Nvidia's historical performance and the factors that could influence its stock price.

Nvidia's market share in AI chips has grown significantly over time, thanks to its vertically integrated approach that offers hardware, software, and services. The company's CUDA platform and DGX Cloud service provide a superior total cost of ownership, making Nvidia's GPUs the fastest and cheapest AI chips on the market. This competitive advantage has driven Nvidia's stock price higher, with the company's shares climbing more than 2,700% over the past five years.

Historically, Nvidia's earnings growth and gross margins have been strong indicators of its post-earnings stock performance. In the past eight quarters, Nvidia's stock rose on six occasions in the one-month period following the report, with four instances of double-digit gains. This suggests a positive correlation between Nvidia's earnings growth and gross margins with its stock performance. However, it's essential to consider that stocks don't always follow historical trends, and short-term performance is not guaranteed.

Analyst expectations and guidance also play a significant role in Nvidia's stock price movements following earnings releases. In the past eight quarters, Nvidia stock rose on six occasions in the one-month period following the report, with four instances of double-digit gains. This suggests that positive analyst guidance and earnings beats can drive the stock price up. However, it's important to note that stocks don't always follow historical trends, and short-term performance is not guaranteed.

Nvidia's product launches and announcements have historically influenced its stock performance positively. The upcoming launch of Nvidia's Blackwell architecture and best-performing chip ever could drive similar positive reactions. However, investors should consider Nvidia's long-term potential, as the company's leadership in AI and commitment to innovation suggest continued growth.

While Nvidia's stock performance has been impressive, the author's core investment values emphasize a focus on sectors that generate stable profits and cash flows, such as utilities, renewable energy, and the REIT sector, over speculative ventures like AI that lack profitability. The author prioritizes investments that offer consistent, inflation-protected income, advocating for an income-focused strategy, known as the Income Method, which is particularly suited for retirement portfolios.

In conclusion, Nvidia's historical performance and the factors influencing its stock price suggest that the company is a strong investment option. However, the author's investment philosophy emphasizes stable income-generating investments over speculative ventures. Therefore, investors should consider the long-term potential of Nvidia alongside other income-focused investments, such as utilities, renewable energy, and REITs, to build a diversified portfolio that generates consistent returns.