Is now the time to buy Nvidia stock? With the company's upcoming earnings report on May 20, investors are left wondering whether to add shares or wait for the results. While the data suggests a compelling case for buying now, it's important to consider the broader context and historical trends. In my opinion, Nvidia's stock is a buy-and-hold strategy, and here's why.
The Case for Buying Now
Nvidia's stock has delivered generational returns over the last few years, and the company's position at the center of the AI revolution is a powerful catalyst for continued growth. The data we have so far indicates that Nvidia is poised to meet or exceed Wall Street's expectations for Q1 results, with revenue and earnings per share (EPS) in line with management's guidance. This is particularly interesting because it suggests that the company is benefiting from the accelerated data center buildouts to support large language model (LLM) training and real-time inference deployments.
The Importance of Wall Street's Expectations
Wall Street's consensus sets a high bar for Nvidia, and the company's ability to clear it would validate the AI capex supercycle. In my view, the real focus from Wall Street when the report comes out will be on Nvidia's guidance. Any commentary suggesting sustained, high-double-digit percentage revenue growth through the year would likely lift sentiment and reinforce the case for action over hesitation.
Nvidia's Valuation
Currently, Nvidia trades at a forward price-to-earnings (P/E) multiple of 25, which is well below its average during the AI revolution. When viewed against the scale of the AI opportunity, Nvidia's valuation appears quite reasonable rather than stretched for a secular compounder. Attempting to time the market around a single earnings event is usually an exercise in false precision, and the smarter approach is to focus on the long-term fundamentals: Nvidia's dominant market position, accelerating product cycles, and the shift toward AI across industries beyond technology.
Historical Trends
Nvidia's track record following an earnings report offers another layer of insight for smart investors. Throughout the AI revolution, the company has beaten consensus estimates most of the time, and the short-term stock reactions to those reports are usually modest. However, the longer-term picture offers a more decisive conclusion. Holding Nvidia stock through earnings has historically rewarded investors handsomely, with average returns one quarter later tending to rise by double digits, and one-year returns frequently exceeding 100% during more bullish cycles.
The Takeaway
In my opinion, Nvidia's stock is a buy-and-hold strategy, and the upcoming earnings report is an opportunity to add shares. While the data suggests a compelling case for buying now, it's important to consider the broader context and historical trends. Nvidia's dominant market position, accelerating product cycles, and the shift toward AI across industries beyond technology make it a strong investment for the long term. Personally, I think that the company's ability to clear Wall Street's expectations and sustain high-double-digit percentage revenue growth through the year would validate the AI capex supercycle and likely lift sentiment.
