Even though it's only half over, November has already been a busy month. In addition to the U.S. presidential election and a Federal Reserve meeting that came with another reduction to prime lending rate, companies across all industries have been reporting third-quarter earnings over the last few weeks.
But the month's busyness is far from over. Nov. 20 is another important date, especially for semiconductor stock Nvidia(NASDAQ: NVDA), as it reports third-quarter earnings then. Here's why I think the stock is set to soar following the report and my reasoning for my recommendation on what to do if you are considering buying it. Is it a buy? Read on to find out.
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What is happening on Nov. 20?
As an investor in many technology stocks, I've spent a good bit of time over the last several weeks combing through earnings reports for artificial intelligence (AI) companies. The first stocks I analyzed were the "Magnificent Seven" -- Microsoft, Alphabet, Apple, Meta Platforms, Amazon, Tesla, and (of course) Nvidia.
The only Magnificent Seven member that has not yet reported earnings this season is Nvidia. That will change this week. With Nvidia scheduled to report third-quarter results on Nov. 20, all eyes are going to be focused on the AI darling's progress.
Image source: Getty Images.
How has Nvidia stock typically moved after earnings reports?
The chart below illustrates movements in Nvidia's share price between November 2022 and November 2024. The line in the graph is annotated to include Nvidia's earnings reports, which are depicted by the purple circles.
The big-picture idea seen above is that Nvidia stock has gained significantly over the last two years. A share price return of nearly 1,000% in just two years is not the status quo. Clearly, the AI narrative has played a big role in Nvidia's stock price gains for the last couple of years.
However, the bigger idea that I'd like to emphasize is that there tends to be notable volatility in Nvidia stock leading up to the time of earnings. This upcoming report is no different -- between Nov. 1 and Nov. 13, shares of Nvidia have gained 8%. That's a pretty big move in a two-week time period.
If history is any indicator, I'd say there is more than an even chance that Nvidia stock soars following its earnings report next week. There is a lot on the line for this particular report, and I'd caution investors against getting caught up in momentum-driven narratives.
Why is Nvidia's upcoming earnings release so important
One of my beliefs about Nvidia's earnings report next week is that few investors are going to place much weight on the company's third-quarter results. Rather, I think the overwhelming majority of investors are going to be honed in on one thing: future guidance.
In particular, Wall Street analysts are going to be dialed in on the progress of Nvidia's upcoming launch of the Blackwell GPU architecture. So far, the entire narrative surrounding Blackwell has been nothing but 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 wind up evolving into a bigger problem for Nvidia. Following a string of disruptions over at Supermicro, rumors are swirling that Nvidia is routing Blackwell orders away from its key partner in favor of other IT infrastructure specialists. These are only rumors and hopefully more will be learned in the report or the conference call that follows its release.
The bottom line
I do not have a crystal ball that can tell me how Nvidia stock will move after the company reports earnings next week. On the one hand, it's widely known at this point that demand for Blackwell is through the roof. Morgan Stanley is even forecasting $10 billion in sales from the new product by the end of the year. To put that figure into perspective, Nvidia barely generated $10 billion in revenue for the entire year back in 2020.
If investors learn next week that Blackwell is tracking to plan, then I surmise there will be a positive reaction that's reflected in the stock price. If by chance the Blackwell guidance exceeds expectations, then look out -- Nvidia stock could rocket to a new high.
But with all of this said, I am wary that a decision to move on from Supermicro may have come too late. While I am not too worried about Blackwell's long-term success, I think any near-term headwinds Nvidia experiences could give an opening to the competition. If I am right, Nvidia could be looking at an unwanted road bump in its supply chain which could take a toll on near-term growth prospects and result in a sell-off in the stock.
While I ultimately remain optimistic about Nvidia's report next week, I'd encourage investors to remain on the sidelines -- especially considering how much the stock is already moving leading up to the earnings call.
There is just too much riding on this report, and not enough concrete information regarding 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.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
