Anticipated Rise: Nvidia's Shares Likely to Surge Post-November 20th
Anticipated Rise: Nvidia's Shares Likely to Surge Post-November 20th
Despite being only halfway through, November has been a packed month. Apart from the U.S. presidential election and a meeting of the Federal Reserve resulting in a decrease in the prime lending rate, corporations across varied industries have been sharing their third-quarter earnings over the past few weeks.
Yet, the month's activities are far from concluding. November 20th is an important date, notably for Nvidia's (NVDA -1.68%) semiconductor stock, as they report their third-quarter earnings on this day. Let's delve into why this stock might skyrocket post-report and the reasoning behind my suggested action if you're considering buying it. Is it a buy? Keep reading to discover the answer.
What's happening on November 20th?
As a tech stock investor, I've been thoroughly analyzing earnings reports of AI companies for the past few weeks. Initially, I assessed the "Remarkable Seven" –Microsoft, Alphabet, Apple, Meta Platforms, Amazon, Tesla, and of course, Nvidia.
Amongst these seven, Nvidia is the only one that hasn't yet reported earnings this season. That will change this week. With Nvidia scheduled to report third-quarter results on November 20th, all attention is going to be on this AI powerhouse's progress.
How has Nvidia stock usually behaved post-earnings reports?
The following chart reveals the price fluctuations of Nvidia's shares between November 2022 and November 2024. The chart's line is annotated to include Nvidia's earnings reports, which are represented by the purple circles.
This chart showcases that Nvidia stock has skyrocketed over the last two years, yielding a return of nearly 1,000%. Generally, the AI narrative has played a significant role in the stock's price increase for the last couple of years.
However, to underline a more critical observation, I'd like to emphasize that there's often notable volatility in Nvidia stock leading up to the time of the earnings report. As with this upcoming report, between November 1st and November 13th, shares of Nvidia have gained 8%. That's a substantial increase within two weeks.
If history serves as an indicator, I'd say there's more than an even chance that Nvidia stock will soar after its earnings report next week. There's a lot at stake for this particular report, and I'd caution investors against being swayed by momentum-driven narratives.
Why is Nvidia's upcoming earnings release so significant?
A belief I hold regarding Nvidia's earnings report next week is that investors will place little emphasis on the company's third-quarter results. Instead, I believe the overwhelming majority of investors will be focused on one thing: future guidance.
In particular, Wall Street analysts are going to be centered on the progress of Nvidia's upcoming launch of the Blackwell GPU architecture. So far, the overall narrative surrounding Blackwell has been extremely positive – with some reporting that the new chipsets are already sold out for the next year.
However, some recent financial issues over at Super Micro Computer could possibly evolve into a larger problem for Nvidia. Following a series of disruptions at Supermicro, whispers are circulating that Nvidia is redirecting Blackwell orders away from its primary partner in favor of other IT infrastructure specialists. These are just rumors, and hopefully, more information will be disclosed in the report or the conference call following its release.
The final takeaway
I don't possess a crystal ball that can predict how Nvidia stock will move after the company reports earnings next week. On the one hand, it's well-known that demand for Blackwell is astronomical. Morgan Stanley is even forecasting $10 billion in sales from the new product by the end of the year. To provide some perspective, Nvidia only generated $10 billion in revenue for the entire year back in 2020.
If investors discover next week that Blackwell is on track, I suppose there will be a positive reaction reflected in the stock price. If by chance, the Blackwell guidance exceeds expectations, then prepare for Nvidia stock to reach new heights.
Nonetheless, I remain cautious that a decision to move away from Supermicro may have occurred too late. While I am not too worried about Blackwell's long-term success, I'm concerned that any near-term challenges Nvidia faces could provide an opening for competitors. If my assumptions are correct, Nvidia could be facing an unwanted obstacle in its supply chain, which could negatively impact short-term growth prospects and lead to a sell-off in the stock.
Although I remain hopeful about Nvidia's report next week, I'd encourage investors to remain on the sidelines – especially considering the magnitude of the stock's movement leading up to the earnings call.
There is just too much riding on this report, and very little concrete information related to Blackwell has been disclosed. I think buying Nvidia stock prior to next week's report is a move more aligned with a day trader as opposed to a long-term investor.
Given the anticipated report of Nvidia's third-quarter earnings on November 20th, there may be significant movements in the stock market. Investors should consider the historical volatility of Nvidia's stock before and after earnings reports, as well as the potential impact of future guidance on the upcoming launch of the Blackwell GPU architecture.
In light of the substantial increase in Nvidia's stock over the last two years and the high demand for chipsets like Blackwell, there is a good chance that the stock will soar after the earnings report. However, external factors such as rumors of redirecting orders away from Super Micro Computer could potentially impact the stock's performance.
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Investors looking to finance a potential investment in Nvidia stock should consider the current market volatility and the potential risks and rewards associated with tech stocks, particularly during earnings reports. With the stakes high for Nvidia's upcoming report, it may be prudent for long-term investors to wait for more concrete information before making a purchasing decision to ensure they're investing their money wisely.]