Will Nvidia Stock Pop on May 20 Earnings? How to Position Now

The strongest indicator of demand for Nvidia comes from its large customers – major hyperscalers such as Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOGL). The latest results from these companies show that they are experiencing growth in their cloud revenue streams and are willing to invest heavily in new AI infrastructure.

For instance, Microsoft has stated that it plans to invest $190 billion over the course of calendar year 2026, while Amazon is anticipated to invest around $200 billion (although it has only spent approximately 25% of this amount through the end of Q1). Alphabet has been capitalizing on growing demand for AI with significant investment levels and anticipates significantly increasing its capital expenditures by 2027 ($180-$190 billion) relative to prior years' levels.

In addition to these three, other leading firms, such as Tesla (TSLA) and Meta Platforms (META), are currently investing substantial amounts of capital in AI initiatives and therefore will likely continue to demand Nvidia's products. 

Consequently, the total commitment shown by all of these firms indicates that demand for AI compute capabilities will continue to accelerate in the coming months/years and that increased demand for AI compute may ultimately manifest within Nvidia's financial reports and guidance.

Recent earnings announcements from several major semiconductor companies support the idea that there is still healthy demand for artificial intelligence (AI). 

Advanced Micro Devices Inc (AMD) posted revenue of $10.3 billion, an increase of 38% over last year; this includes a data center segment that grew to $5.8 billion or +57% as they shipped more GPUs. Following this news, AMD's stock rallied. Intel Corp (INTC) generated first-quarter revenues of $13.6 billion, up 7% compared to the same quarter last year; Intel noted strong demand for CPUs as the market transitions from training to inference and towards agentic AIs - AIs that can make plans and then execute them with little or no human support. 

Collectively, these results can be used as evidence of an overall long-lasting cycle of AI, extending beyond any specific company, and they provide a positive environment for Nvidia as they prepare to release its results.

When a company has valuations or estimates that are much higher than those of its competitors after producing a very strong quarter, there's a high likelihood that the stock will be rewarded by investors because the price is not fully reflected in the company's current outstanding share price. 

Based on its solid business model and the market's absorption of its shares, it seems probable that Nvidia's valuation will reward the company in the long run, whereas for longer term competitors such as AMD and Intel, their valuations and performance levels relative to those of Nvidia indicate that their prices will not likely see the same type of significant capital appreciation as will Nvidia if the company's performance continues to improve in the future.

In short, if Nvidia's results exceed analysts' expectations this quarter (which could happen), then investors will likely support Nvidia's share price because there is still room for investor support. 

This will provide investors with additional incentives to invest more capital into Nvidia after rewarding them in this quarter, thereby increasing the potential for future capital gains in future quarters and for increasing investor value (via analyst upgrades) from its consistent market performance over the last few years.

Investors who are solely focused on the upcoming quarter could miss out on Nvidia's potential for extended growth over multiple years going forward. 

Nvidia has become one of the biggest players in the AI boom that began in early 2023. Its graphics processing units (GPUs) were designed to create images for video games; however, now they are the gold standard for training and running AI. 

Nvidia has increased in value by approximately 1410% over the past three years and, despite concerns of an AI bubble, increasing competition and geopolitical concerns, did not see a great deal of activity over the last six months. 

Additionally, Nvidia believes they have good visibility on what their demand will be for the next couple of years and will have sufficient production capability to support this demand. This production capability will be fueled by three main trends: hyperscaler companies building out data centres, more countries developing sovereign AI programs and an increase in demand for agentic AI.

Nvidia will continue to be a market leader within the data centre ecosystem, and it has additional growth levers in other areas that will help satisfy customer requirements. 

These areas include the advancement of robotics and supporting automakers such as BYD (BYDDY), General Motors (GM), Mercedes-Benz (MBGYY) and Volvo (VLVLY) with autonomous driving technology, along with being a key supplier providing picks-and-shovels to some of the leading players developing quantum computing. 

As such, additional growth levers provide some level of stability in their growth story if one end market becomes cooler than expected.

There is a powerful temptation to buy Nvidia shares before they report earnings; however, it is crucial to have some discipline in the face of potential volatility caused by events. 

Many investors, therefore, are choosing to scale into their position (rather than buy all at once). This strategy is sensible as a potential range has been established for the stock from either upside relief to downside volatility. 

Nvidia has been known to trade down on earnings even when they have exceeded the analyst’s consensus, most commonly driven by profit taking and conjecture, but occasionally driven by actual results being significantly different than analyst expectations. A small amount of cash in reserve will allow an investor to purchase shares on a post-report price shock regardless of their emotional attachment to the stock. 

In addition, some measured pre-positioning is wise as there is the potential of an analyst upgrade creating an upward price move with no further opportunity for investment prior to the next quarterly report timeframe.

Many think that Nvidia is going to have another growing quarter and that its stock price will react positively. However, when looking back at past examples, it is clear to see that accurately predicting stock price reactions is not something that can be done consistently over time. 

Having patience usually pays off when the company is a leader in its category and the company's underlying fundamentals have been backed up by other metrics indicating future demand and have been validated by competitors or similar companies' trends or patterns as well. 

As Charlie Munger once so eloquently expressed it, "The real money isn’t in timing – it’s in the waiting.” On a short-term basis, Nvidia has a specific identifiable catalyst but there continues to be a long-term opportunity.