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

Nvidia is expected to report fiscal Q1 results on May 20 after a strong fiscal Q4, when revenue rose 73% year over year to $68.1B, data center revenue increased 75% to $62.3B, and gross margin reached 75%. Management guided for Q1 revenue of about $78B, plus or minus 2%, but the article argues rising competition from Broadcom, Amazon, and Alphabet could eventually pressure growth and margins. The piece is primarily a valuation and competitive-risk commentary rather than new company-specific news.

Analysis

Near-term, this reads less like a fundamental NVDA debate and more like a positioning debate around margin durability. The first derivative is still strong demand, but the second derivative that matters is whether hyperscalers shift mix toward custom silicon once volumes get large enough to justify the engineering spend. If that inflection is real, the market should expect NVDA multiple compression before it sees a meaningful revenue slowdown, because pricing power tends to break earlier than unit growth.

The clearest beneficiaries of a “custom silicon adoption” regime are the companies with repeated design wins and embedded software/service layers, not the pure-play accelerator vendor. AVGO is the cleanest relative winner because it monetizes both ASIC content and the broader networking/spine that becomes more valuable as AI clusters get denser. AMZN and GOOGL can also be viewed as both competitors and customers: their internal silicon efforts reduce external spend over time, while their capex intensity still supports the broader AI supply chain in the interim.

The contrarian point the market may be missing is timing: the competitive threat is more likely to cap future margin expansion than to show up immediately in this quarter’s numbers. That argues against shorting NVDA into earnings unless you have a catalyst beyond “competition exists,” because the stock can still re-rate higher if guidance surprises and management sounds confident on backlog visibility. The more attractive expression is to own the second-order winners and fade the most crowded long only after a post-print gap up, when implied expectations reset and the valuation becomes a harder hurdle.

Risk is that the market already anticipates this narrative and treats any modest guide-down or margin pressure as proof that the moat is fading. If management even hints at supply easing, pricing concessions, or customer-specific deployment shifts over the next 1-2 quarters, the stock could de-rate sharply despite still-strong absolute growth. Conversely, if agentic AI spending remains broad-based, the custom silicon threat may stay contained to niche workloads for 6-12 months longer than bears expect.

Key Decisions for Investors

• Do not short NVDA into the print; wait 24-48 hours post-earnings and only consider a tactical short if the stock gaps up on in-line guidance and forward gross margin stops expanding.
• Favor a relative-value long AVGO / short NVDA pair over the next 1-3 months: AVGO benefits if AI workloads fragment into customized accelerators, while NVDA bears the direct burden of any pricing-pressure narrative.
• Initiate a modest long GOOGL and AMZN basket versus NVDA for a 3-6 month horizon; both can monetize internal silicon while still driving AI infrastructure demand, giving better asymmetry if capex stays elevated but hardware mix shifts.
• Use NVDA downside puts rather than outright shorting if you want exposure to a post-earnings de-rating: 1-2 month put spreads provide convexity if margins disappoint, with defined risk if the report clears expectations.
• If NVDA sells off 8-12% on earnings without a guide cut, treat that as a buy-the-dip window for a 6-12 month horizon; the market is likely to over-discount competition before it is visible in revenue.