Nvidia Reports Earnings Next Month. Here's Why I'm Not Buying the Stock Before the Report.

Nvidia is set to report fiscal Q1 results on May 20 after posting fiscal Q4 revenue of $68.1B, up 73% year over year, with data center revenue up 75% to $62.3B and gross margin at 75%. Management guided for Q1 revenue of $78B plus or minus 2%, implying another strong sequential increase, but the article highlights rising competition from Broadcom, Amazon custom chips, and Alphabet TPUs as a potential long-term margin and growth risk. The piece is ultimately cautious on valuation rather than operational weakness.

Analysis

NVDA is still the cleanest beneficiary of the AI capex cycle, but the trade is shifting from a scarcity premium to a margin-defense story. The important second-order issue is not whether hyperscalers keep spending; it’s whether they keep buying the highest-margin, most generalized silicon or increasingly route workload-specific demand into lower-cost alternatives. That matters because even a modest mix shift can compress NVDA’s operating leverage faster than revenue growth decelerates.

The most interesting read-through is that the competitive threat is not just substitution, it is customer bargaining power. As AMZN, GOOGL, and AVGO all expand their own silicon footprints, they create credible outside options that can cap price increases and improve allocation discipline across the ecosystem. In practice, this may hit NVDA’s gross margin before it hits top-line growth, which is why the stock can still print a strong quarter and underperform if commentary suggests “good enough” alternatives are proliferating.

Near term, the catalyst window is earnings plus guidance, but the risk horizon is months rather than days. If management reiterates very strong demand but avoids explicit margin expansion language, the market may interpret that as evidence the easy pricing gains are behind us. The contrarian view is that consensus is over-obsessing on unit competition and underestimating the duration of the buildout; however, at this valuation, the stock needs the buildout to stay both massive and highly centralized. Any sign of decentralized procurement is enough to compress the multiple even if fundamentals remain excellent.

Best setup is to express bullish AI exposure through names with more durable distribution or operating leverage than the pure-play GPU leader. If NVDA beats but guides conservatively on margin, that is likely a sell-the-news event rather than a thesis break, especially if the market starts valuing AI infrastructure like a capital-intense platform business instead of a monopoly chip franchise.

Key Decisions for Investors

• Avoid initiating fresh outright long NVDA into earnings; wait for post-print reaction. If the stock sells off 5-8% on an intact demand print, use that as a better entry for a 3-6 month long with a tighter stop under the gap low.
• Pair trade: long AVGO / short NVDA into the next 1-2 quarters. AVGO is better positioned to benefit from workload specialization and customer diversification, while NVDA carries the higher margin-compression risk if hyperscalers internalize more silicon.
• Use AMZN and GOOGL as the cleaner AI-capex expressions on a 6-12 month horizon. Their in-house silicon increases strategic leverage and reduces external compute cost, which can support margin expansion even if the broader AI spend cycle slows.
• For directional hedging, buy NVDA puts or put spreads expiring 1-2 months after earnings. The key risk is not a miss, but a strong quarter paired with cautious margin commentary and a lower multiple.
• If you want exposure to AI infrastructure without single-name concentration risk, prefer a basket long AVGO/AMZN/GOOGL versus NVDA. The reward is lower upside in a melt-up, but materially better downside protection if competition becomes the dominant narrative.