Nvidia Stock's Next Big Catalysts Could Come on May 22. Should You Buy Shares Before Then? | The Motley Fool (2024)

Here's why the artificial intelligence (AI) tech leader is likely to beat Wall Street estimates when it reports its fiscal first-quarter earnings on Wednesday, May 22.

Nvidia (NVDA -1.99%) stock is having another great year. In 2024, shares of the artificial intelligence (AI) tech giant have gained 91.9% through May 15, crushing the S&P 500 index's 11.9% return. The stock's longer-term performance is even more stunning, as it turned an investment of $5,000 into nearly $1 million over the last decade through April 29.

A catalyst that might propel Nvidia stock higher is coming on Wednesday, May 22, after the market close. That's when the company is scheduled to release its results for its quarter ended on April 28.

Given Nvidia stock's fantastic recent performance, expectations are high and built into the stock price. For the stock to rise after the report, the company will likely have to at least comfortably beat Wall Street's estimates for the quarter and issue guidance for the next quarter that's notably higher than analysts are projecting.

What are Wall Street's expectations?

You can use the below chart to gauge Nvidia's fiscal first-quarter results.

MetricFiscal Q1 2024 ResultNvidia's Fiscal Q1 2025 GuidanceNvidia's Projected ChangeWall Street's Fiscal Q1 2025 Consensus EstimateWall Street's Projected Change
Revenue$7.19 billion$24 billion234%$24.57 billion242%
Adjusted earnings per share (EPS)$1.09$5.41*396%$5.57411%

Data sources: Nvidia and Yahoo! Finance. Fiscal Q1 2025 ended April 28, 2024. *Calculated by the author based on the metrics for which management provides guidance. Data as of May 15, 2024.

The below chart can be used to gauge Nvidia's guidance for its fiscal second quarter.

MetricFiscal Q2 2024 ResultWall Street's Fiscal Q2 2025 Consensus EstimateWall Street's Projected Change
Revenue$13.51 billion$26.57 billion97%
Adjusted EPS$2.70$5.92119%

Data sources: Nvidia and Yahoo! Finance. Fiscal Q2 2025 ends in late July 2024. Data as of May 15, 2024.

Two reasons Nvidia seems poised to beat Wall Street's expectations

The first reason Nvidia looks poised to beat Wall Street's estimates has to do with management "visibility." Nvidia's top management team has said on the company's recent quarterly analyst earnings calls that it has good visibility into near-term sales in its data center business. That's because the company has a backlog of orders to fulfill due to demand being so strong for its AI-enabling data center chips and related products.

Management probably has less of a handle on near-term demand for products in some of its other businesses. But that doesn't matter much because data center is by far Nvidia's largest market platform, and so it drives overall results.

The better management's visibility into near-term sales, the better idea it has of its near-term financial results. You can be sure Nvidia's savvy top management team set fiscal Q1 guidance at levels it feels very confident the company will exceed. Wall Street analysts use Nvidia's guidance to help establish their estimates. For many years analysts have underestimated the company's growth potential, and my bet is this dynamic will continue.

The second reason that Nvidia's upcoming report -- including from a fiscal Q2 guidance standpoint -- seems poised to be better than analysts expect stems from the recent quarterly reports of several of Nvidia's biggest customers. Companies such as Facebook parent Meta Platforms, Alphabet, and Microsoft are continuing to ramp up their already significant spending on AI initiatives, which is a positive for Nvidia.

For instance, Meta now expects its full-year 2024 capital expenditures to range from $35 million to $40 million, up from its prior plan of $30 million to $37 billion. This is due to the company continuing to "accelerate our infrastructure investments to support our AI roadmap," CFO Susan Li said on the Q1 earnings call.

Should you buy Nvidia stock before May 22?

Of course, there are no guarantees, but I think it's more likely than not that Nvidia stock will rise after the upcoming earnings release for the reasons just outlined. And there's another possible catalyst: The timing seems good for the company to announce a stock split.

That said, if you're a long-term investor, you don't need to concern yourself with trying to time your stock buys. Over the long term, if your bullish thesis is correct for Nvidia, it shouldn't make that much difference if you paid a bit more or less for its stock many years back.

Let's look at an example. Nvidia stock closed at $946.30 per share on May 15. Exactly five years ago, the stock closed at $39.90, adjusted for stock splits. If you invested $1,000 in Nvidia stock five years ago, your investment would now be worth $23,717. Had you invested in the stock about five years ago and its price per share was, say, 15% higher than $39.90, or $45.89, your investment would now be worth $20,621. I'm guessing you'd be thrilled to have turned your $1,000 into nearly $21,000 in five years, and not kicking yourself for not doing a little better.

A smart way to build your position in any stock is to invest the same dollar amount at regular intervals, such as monthly or quarterly. This method eliminates the potential that you'll invest your entire amount at what turns out to be a near-term peak for the stock price.

Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Nvidia Stock's Next Big Catalysts Could Come on May 22. Should You Buy Shares Before Then? | The Motley Fool (2024)
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