In 2023 and 2024, Nvidia(NASDAQ: NVDA) pretty much equaled a ticket to an investment win. Over that time period, shares of the artificial intelligence (AI) chip giant skyrocketed, gaining more than 800%. This was thanks to the company's dominance in the high-growth market that supercharged earnings quarter after quarter. A bet on Nvidia was a bet on AI -- and investors were eager to get in on this technology that's often seen as the next big thing.
But Nvidia hasn't been such a sure thing for investors this year. Like many other stocks, particularly growth players, it's tumbled amid concern about the potential impact of President Trump's import tariffs on the economy -- and eventually corporate earnings. Nvidia shares have rebounded from lows, but they're still down about 1% for the year.
This week, though, Nvidia is heading toward a moment that could offer the stock direction. I'm talking about the company's fiscal 2026 first-quarter earnings report. Will Nvidia stock soar after May 28? History offers us a decidedly clear answer.
Image source: Getty Images.
Nvidia's top GPUs
First, though, a quick note about Nvidia's earnings performance so far and the general AI environment. Companies have been pouring investment into their AI programs, and as part of that, they've flocked to Nvidia for its top graphics processing units (GPUs) and related products and services. Analysts expect the AI market to roar past $2 trillion early in the next decade as more and more companies jump on board the AI train. Nvidia, which already is greatly benefiting from the AI boom, could be one of the biggest winners of this long-term growth story.
So far, the company has reported many quarters of double- and triple-digit revenue growth, with revenue and net income reaching records. And profit on sales is high, with gross margin surpassing 70%. All of this has helped drive Nvidia stock higher.
As I mentioned, the president's tariff plan halted the momentum as investors worried about potentially higher prices and even a U.S. recession. In that sort of environment, customers could cut back on AI spending, and that would hurt Nvidia. But recent trade deals with the U.K. and China have boosted optimism that import tariff levels won't be as steep as initially announced, averting a major slowdown. That's helped Nvidia and other growth stocks to rebound in recent days.
A record of beating estimates
Now, let's consider Nvidia's upcoming earnings report. The chip giant has a record of beating analysts' estimates and announcing positive news such as the successful launch of its Blackwell architecture during the last earnings period. Blackwell brought in $11 billion in revenue during that time, its first quarter of commercialization.
There's reason to be optimistic about the report ahead, and we're already prepared for one particular negative point since Nvidia announced it a few weeks ago: a $5.5 billion charge related to U.S. restrictions on the export of its chips to China. So that piece of news shouldn't impact stock performance following the earnings announcement.
Considering all of this, will Nvidia soar on its earnings news? A look at history offers us some clues. I took a look at Nvidia's stock performance in the six months following the seven quarterly earnings reports from May 2023 through November 2024. (I didn't include the latest report, from this February, since six months haven't yet passed.)
During the first five periods, Nvidia stock soared in the double-digits from the report through the following six months. Gains ranged from 50% to 90%. Only after the past two earnings reports has Nvidia declined in the six-month period -- and it's important to keep two things in mind regarding these declines.
The reason behind recent declines
First, they've been small, at less than 1% in the six months following the August 2024 earnings report and in the single digits following the November 2024 report. And second, the losses came mainly early this year, as part of the concern about Trump's tariffs and a general question about the future of AI spending. (That spending question was resolved after big Nvidia customers including Meta Platforms and Alphabet reiterated their AI investment plans for the year.)
Now let's consider what this tells us about Nvidia's performance post-May 28. If history is right, Nvidia is on track to soar, and in a big way, after its earnings report as this has happened most frequently in the past. That said, the declines we've seen after the past two earnings reports were heavily linked to tariff uncertainty. Though the tariff situation has improved, until the issue is completely resolved, it could represent a potential headwind for Nvidia's stock performance.
So all of this shows us that, yes, history says Nvidia could be heading for double-digit gains in the months to follow its earnings report -- but it's important to be aware that an unexpected economic or political issue could get in the way.
The good news, though, is history shows us one other thing: Nvidia always has recovered from losses in the past and gone on to advance. And the company's strong competitive position and presence in a high growth market should help it do that again if it encounters tough times. And that means, whether Nvidia soars after May 28 or not, it still is very likely to win over the long term.
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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. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
