Nvidia(NASDAQ: NVDA) shares fell sharply earlier this year as investors worried about how tariffs and export curbs would impact revenue. However, the stock recouped its losses in May as hyperscale cloud companies raised their capital spending forecasts and the Trump administration revoked the Biden-era AI Diffusion Rule.
However, there is another inflection point on the horizon. Nvidia will announce its financial results for the first quarter of fiscal 2026 after the market closes on Wednesday, May 28. The stock has often been volatile after earnings events. For instance, it declined by more than 8% following the previous report.
Nevertheless, Wall Street has clear advice for investors: Among the 71 analysts who follow Nvidia, the stock has a consensus rating of "buy" and a median target price of $160 per share. That implies 22% upside from the current share price of $131. Here's what investors should know about Nvidia.
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The investment thesis for Nvidia
Nvidia specializes in accelerated computing, a discipline that pairs specialized hardware and software to speed up complex data center workloads, such as artificial intelligence (AI). The company is best known for its graphics processing units (GPUs), chips often referred to as AI accelerators. According to IoT Analytics, Nvidia has more than 90% market share in data center GPUs.
However, the company is truly formidable because it supplements its GPUs with adjacent hardware, like CPUs, interconnects, and networking gear, such that it essentially builds entire data centers. CEO Jensen Huang says the vertically integrated strategy lets Nvidia build systems with the lowest total cost of ownership.
Additionally, Nvidia has spent about two decades building its CUDA software platform, which now includes hundreds of code libraries, frameworks, and pretrained models that help developers build AI applications across a broad range of domains. That includes video analytics, speech recognition, recommendation engines, and customer service agents.
Importantly, while generative AI capabilities have recently been the driving force behind demand for Nvidia's accelerated computing products, the company is well positioned to maintain its leadership through the next phase of the AI revolution: self-driving cars and autonomous robots. "Physical AI and robotics will bring about the next industrial revolution," according to Jensen Huang.
Nvidia Drive and Nvidia Isaac are platforms that support the development of self-driving cars and autonomous robots, respectively. Earlier this year, Jensen Huang said, "We build technology that almost every self-driving car company uses." That list includes Alphabet's Waymo and Tesla. Similarly, Amazon uses Nvidia Isaac to train, simulate, and manage its warehouse robots.
Importantly, Nvidia debuted GR00T N1.5 earlier this month, a customizable foundation model for humanoid reasoning. CFRA analyst Angelo Zino believes GR00T will strengthen Nvidia's position in the AI ecosystem. He also believes the recent decision to open its NVLink interconnect technology -- which turns disparate chips into a single accelerator -- to custom chipmakers like Marvell and MediaTek will create new opportunities for revenue growth.
What Wall Street expects from Nvidia's first-quarter financial report
Nvidia will report its financial results for the first quarter of fiscal 2026 on Wednesday, May 28. The company guided for 53% revenue growth and 49% non-GAAP (non-generally accepted accounting principles) earnings growth. But several analysts have revised their estimates lower in the last 90 days due to concerns about export restrictions and tariffs. The Wall Street consensus now says Nvidia's earnings will increase 44%.
Importantly, beating that number does not necessarily guarantee a positive reaction from the market. Nvidia exceeded the top- and bottom-line estimates in the fourth quarter, but the stock fell more than 8% the next day. Investors should expect similar volatility this time around. At present, pricing data from the options market implies a 6-point swing, meaning the market expects the share price to land between $125 and $140.
Investors should either listen to the conference call or read a transcript of the event. Jensen Huang will almost certainly discuss important issues like export restrictions related to the Chinese market, recent deals in the Saudi Arabian market, and what the company expects concerning the semiconductor tariffs that President Donald Trump has yet to finalize.
So, returning to my original question: Should you buy Nvidia before May 28? Any investor who plans to hold the stock for several years can buy a small position today. If the price declines post-earnings, consider adding a few more shares. But investors looking for a quick profit should avoid the stock. There are too many unknowns to be sure of a positive reaction.
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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. Trevor Jennewine has positions in Amazon, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Nvidia, and Tesla. The Motley Fool recommends Marvell Technology. The Motley Fool has a disclosure policy.
