Should You Buy Nvidia Stock Before May 20? Here's What History Says.

Nvidia heads into its May 20 earnings report with Wall Street expecting $78.8 billion in revenue and $1.77 EPS, roughly in line with prior guidance of $78 billion excluding China. The article argues that accelerating hyperscaler AI capex — including about $725 billion of combined 2026 spending plans from Microsoft, Amazon, Alphabet and Meta, up roughly 77% from 2025 — supports continued demand for Nvidia's GPUs and networking gear. With the stock trading at a 25x forward P/E, the piece frames Nvidia as a reasonable long-term buy despite near-term earnings volatility.

Analysis

The important second-order effect is that hyperscaler capex is no longer a one-company call on AI demand; it is becoming a coordinated infrastructure arms race. That lowers the probability of a near-term demand air pocket for NVDA, but it also shifts the bottleneck from end-demand to supply allocation, favoring vendors with the highest attach rates in networking, interconnect, and software. In practice, the incremental winner set extends beyond compute to whoever captures the networking dollar per rack and the power/cooling budget per deployed GPU.

The market may still be underpricing the duration of this cycle. If hyperscalers are effectively pre-buying capacity 12-24 months forward, then NVDA’s guide matters less as a single-quarter beat/miss event and more as a read-through on backlog visibility and shipment mix into FY27. The risk is not demand collapse; it is digestion risk if investors realize the pace of spend can support multiple winners, compressing scarcity premiums in the semiconductor complex while leaving the absolute dollar pie intact.

The main contrarian point: the setup is bullish, but consensus may be too linear on margin durability. As capacity constraints ease, NVDA’s mix could tilt toward lower incremental gross margin if supply normalizes or if customers gain bargaining power via multi-vendor sourcing. That makes the post-print reaction asymmetrically dependent on guidance quality, not the headline beat, and argues for owning the leader while fading overextended adjacent beneficiaries that are trading purely on AI beta.

Watch the broader capex chain for confirmation or reversal over the next 1-2 quarters: if MSFT/AMZN/GOOGL/META keep reiterating spend while enterprise IT budgets stay intact, the trade remains intact. If any one hyperscaler signals optimization or longer deployment cycles, the first de-rating likely hits the semis with the least differentiated exposure before it reaches NVDA.

Key Decisions for Investors

• Maintain core long NVDA into the print, but hedge event risk with a small May/June put spread; upside remains intact if guidance confirms multi-quarter acceleration, while downside is capped if the market sells the news.
• Pair trade: long NVDA / short INTC over 3-6 months. The spend cycle should widen the gap between platform leader and legacy CPU turnaround stories; risk is a broad AI-capex pause, which would hurt both but more so the laggard.
• Add MSFT, AMZN, META, and GOOGL on post-earnings capex reaffirmations, but prefer buy-the-dip entries after any 2-4% pullback; these names are the demand transmitters, and their AI spend should support NVDA while compounding cloud monetization.
• Avoid chasing overextended AI secondaries into the print; if NVDA guides well, the next trade is not generic AI beta, but selectivity in networking/power winners with real attach-rate exposure.
• If NVDA trades up sharply on the report, take partial profits on short-dated call exposure and rotate into longer-dated calls or stock, since the more durable move should play out over 1-2 quarters rather than 1-2 days.