Should You Buy Nvidia Stock Before Nov. 20?

Nvidia (NVDA) has been a standout performer in the tech sector, with its stock soaring over 180% this year. As the undisputed leader in AI, Nvidia's graphics processing units (GPUs) are in high demand, driving triple-digit percentage year-over-year revenue growth for five consecutive quarters. With its earnings report for the fiscal 2025 third quarter (ended Oct. 31) approaching on Nov. 20, investors are wondering if Nvidia is a buy before the report.
Nvidia's dominance in AI and data centers has fueled its impressive growth. Its GPUs are the preferred choice for developing AI models, and demand continues to outstrip supply. However, with a P/E ratio of 72, Nvidia's stock is trading at a high valuation. While some analysts predict the stock could reach $200 by the end of 2024, others caution about potential corrections.
Nvidia's new GPU platform, Blackwell, is expected to play a significant role in its Q3 outlook and stock performance. The platform promises a 30x improvement in AI inference speed and cost efficiency, making advanced large language models more accessible. With shipments already underway and Microsoft offering the new GPU to developers, Nvidia's Q3 report might include billions in GB200 sales. If Nvidia exceeds Wall Street's revenue estimate of $32.9 billion, the stock could soar, driven by the Blackwell's potential.
Analysts' revenue and earnings estimates for Nvidia's Q3 are crucial for its stock price. The consensus revenue estimate is $32.9 billion, with adjusted earnings per share expected to be $0.74. If Nvidia beats these estimates, it could boost investor confidence and drive the stock price higher. However, if the company misses expectations, it could lead to a sell-off.
Macroeconomic factors, such as interest rates and inflation, can also impact Nvidia's stock price leading up to Nov. 20. Higher interest rates increase borrowing costs for companies, potentially reducing their ability to invest in Nvidia's products. Inflation, on the other hand, can erode purchasing power, leading to decreased demand for Nvidia's GPUs. However, Nvidia's dominance in AI and data centers may mitigate these effects, as AI adoption continues to drive demand for its products.
Nvidia's earnings report on Nov. 20 could significantly impact its stock price both in the short term and long term. Historically, Nvidia has consistently topped earnings estimates, with a 96% beat rate over the past five years. If Nvidia maintains this trend, we could see a short-term boost in the stock price. However, if the company misses expectations, the stock could face a significant pullback. Long-term, Nvidia's growth prospects in AI, data centers, and gaming remain strong, with analysts predicting average price targets of $1,483.96 in 2024, $3,887.16 in 2025, and $6,591.91 in 2026. However, the stock's high valuation (P/E of 72) leaves little room for error. Investors should consider the potential risks and rewards before making a decision.
Key metrics and data points in Nvidia's earnings report that could significantly influence its stock price include revenue growth, quarter-over-quarter revenue growth rate, margins, and guidance on the new Blackwell chips. If Nvidia misses its expected 80% year-over-year revenue growth or 8.3% quarter-over-quarter revenue growth rate, it could indicate slowing demand. Additionally, investors will scrutinize Nvidia's margins, which have started to dip slightly. Nvidia must maintain its margins to justify its high valuation. Lastly, any guidance on the new Blackwell chips and their impact on sales will be pivotal, as these chips could drive significant growth in the coming quarters.
Nvidia's earnings report on Nov. 20 could have a significant impact on its stock price and the broader market. As the leader in AI, Nvidia's performance is closely watched, and any surprises could ripple through the tech sector. Competitors like AMD and Intel may react to Nvidia's results, potentially affecting their stock prices as well. If Nvidia beats expectations, it could drive demand for AI infrastructure, benefiting cloud providers and data center operators. However, if Nvidia's growth slows or margins decline, investors may question the sustainability of its AI-driven growth story, potentially impacting its stock price and the broader market.
In conclusion, Nvidia's earnings report on Nov. 20 could provide valuable insights into the company's growth trajectory and valuation. While the stock has already soared this year, its high valuation leaves little room for error. Investors should closely monitor Nvidia's earnings report, considering the potential risks and rewards before making a decision. For those seeking stable, income-focused investments, the author recommends exploring dividend stocks in sectors such as utilities, renewable energy, and REITs, which offer consistent, inflation-protected income and capital appreciation opportunities.