The S&P 500 is on track for a 25% rise this year, with many growth stocks playing a major role. However, Nvidia (NASDAQ: NVDA) has emerged as a standout performer, leading the artificial intelligence (AI) chip market with approximately 80% market share. The remarkable demand for Nvidia’s AI chips and related offerings has resulted in impressive earnings growth, often exceeding 100% quarter after quarter.

As we look ahead, investors are particularly focused on a significant event approaching in a few days. Nvidia is set to announce its fiscal 2025 third-quarter earnings on Nov. 20. There’s reason for optimism, given the company’s history of surpassing forecasts and its recent comments regarding “insane” demand for its products. However, with Nvidia’s stock price already up nearly 200% this year, it’s essential to recognize that this quarter may mark a transition for the company as it gears up to launch its new Blackwell architecture.

The pressing question now is: Will Nvidia’s stock rise after Nov. 20? The evidence is accumulating, pointing towards a specific outcome. Let’s explore further.

Nvidia’s Leading GPUs

To understand Nvidia’s trajectory, we need to look at its achievements thus far. The company’s graphics processing units (GPUs) are renowned for their excellence, leading customers to eagerly purchase them, often at a premium price, and sometimes enduring waits for the latest models. Nvidia also offers a comprehensive range of products and services, providing a one-stop-shop for all AI needs. Moreover, its extensive presence across all public cloud platforms enhances accessibility for customers.

These advantages have propelled Nvidia to record revenues in recent quarters, with the data center segment accounting for 87% of its total $30 billion revenue last quarter. This figure exceeds the total revenue Nvidia reported for the previous year. Additionally, Nvidia enjoys a lucrative gross margin that exceeds 70% on its sales.

The forthcoming earnings report represents a pivotal moment for this technology leader. During this third quarter, Nvidia was priming for the production launch of Blackwell, anticipated to occur in the fourth quarter. After experiencing significant growth in recent years, Nvidia predicts a double-digit revenue increase for this quarter, marking a shift from the triple-digit growth witnessed previously.

While some investors may view a deceleration in growth as underwhelming or express concerns about potential challenges during the introduction of new products, these factors could put pressure on Nvidia’s stock post-Nov. 20. Nonetheless, a plethora of evidence indicates that Nvidia’s stock may perform well following the earnings announcement. As previously mentioned, Nvidia has established a robust track record of earnings growth, exceeding expectations for at least the last four quarters.

Comments from Jensen Huang, Larry Ellison, and Elon Musk

<pNvidia’s CEO Jensen Huang has frequently discussed the overwhelming demand for the new Blackwell platform in recent weeks, describing it as “insane” during a CNBC interview. Supporting this, Oracle co-founder Larry Ellison mentioned that he and Tesla’s Elon Musk met with Huang and “pleaded” for more GPUs for their projects. Moreover, Taiwan Semiconductor Manufacturing, the entity responsible for producing Nvidia’s chips, reported a substantial increase in revenue this quarter and noted strong demand from its clients.

These factors suggest that Nvidia may have positive news to share on Nov. 20, potentially driving its stock upward in the following weeks.

However, it’s essential to keep in mind that stocks can sometimes decline despite favorable news. Investors might think the stock has already increased sufficiently and that any good news is already factored into the price. Therefore, accurately predicting short-term stock movements remains challenging.

What does all of this imply for Nvidia and for you as an investor? There are several compelling reasons to feel hopeful about the upcoming report, with the possibility of a stock increase post-Nov. 20. Yet, even if that doesn’t occur, there’s no cause for concern. Nvidia’s stock has considerable growth potential in the long term, bolstered by the company’s market leadership, financial robustness, and continuous innovation. This positions Nvidia as a superb AI stock to acquire and maintain for the long haul.

Adria Cimino holds shares in Oracle and Tesla. The Motley Fool has holdings in and recommends Nvidia, Oracle, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool operates under a disclosure policy.

The Motley Fool collaborates with YSL News to provide financial news, analysis, and commentary to empower individuals in managing their financial futures. Its content is created independently from YSL News.

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