Nvidia Stock: Should You Buy Before Aug. 27? What History Says

Nvidia's Strong Performance and Future Opportunities

Nvidia stock has shown a significant recovery from its lows earlier this year, with high expectations building as earnings are anticipated. Despite increasing competition, the company remains well-positioned to benefit from several emerging infrastructure opportunities. Compared to previous levels during the AI revolution, Nvidia's stock is still attractively priced.

Over the past few weeks, companies across various industries have released their financial results for the second quarter of 2025. For many investors, the focus has been on big tech companies. These results not only reflect the health of the overall economy but also highlight the most important theme in the market: artificial intelligence (AI).

While many AI leaders have already reported their results, Nvidia, the ultimate industry bellwether, is set to announce its earnings on August 27. The anticipation around this event is immense. Let's examine how Nvidia typically performs after earnings and assess whether now is a good time for investors to take action.

How Does Nvidia Stock Generally Perform After Earnings?

The chart below shows Nvidia's price movements over the past three years, with purple "E" markers indicating earnings dates. With just one exception, every earnings release has been followed by increased buying activity, demonstrating the market's strong appetite for Nvidia stock.

The lone exception occurred earlier this year when concerns about competition from Chinese models, such as DeepSeek, combined with uncertainty over President Donald Trump's new tariff agenda raised doubts about Nvidia's future. These concerns created a brief period of caution that interrupted the company's otherwise strong momentum.

However, recent trends indicate that these fears have largely faded, replaced by renewed investor enthusiasm. The clear takeaway is that Nvidia has consistently outperformed over the last few years, with its share price rising alongside the growth of AI.

What Should Investors Be Listening For on Nvidia's Earnings Call?

During the AI boom, Nvidia's business has been driven primarily by strong demand for its graphics processing units (GPUs) and CUDA software system. Although there is growing competition in the GPU market from Advanced Micro Devices and the upcoming release of custom ASICs from Broadcom, there are still several compelling catalysts that could drive long-term growth for Nvidia.

Chip Demand from Hyperscalers

Earlier this year, investors learned that Meta Platforms and Alphabet plan to significantly increase their AI capital expenditure (capex) budgets. Meta invested $14.3 billion in Scale AI and launched a new initiative called Meta Superintelligence Labs (MSL). Meanwhile, Alphabet continues to ramp up spending on servers and data center buildouts, which are clear tailwinds for AI infrastructure. Amazon and Microsoft also maintain large capex commitments, bringing the combined total among the four hyperscalers to an estimated $340 billion on AI infrastructure spending this year alone.

Sovereign AI

After President Trump's inauguration in January, leaders from Oracle, OpenAI, and SoftBank met in the Oval Office to unveil Project Stargate, a $500 billion initiative to develop AI infrastructure in the United States. Countries in the Middle East, including the United Arab Emirates and the Kingdom of Saudi Arabia, have launched similar projects with substantial funding. Nvidia's leading chipsets and data center expertise serve as the backbone for these efforts.

New Life in China

For much of 2025, China was a major obstacle for Nvidia. However, a newly structured agreement with the U.S. government allows the company to reenter this critical market, with Nvidia remitting 15% of its Chinese sales back to Washington. While this may seem costly at first, Nvidia's pricing power in the chip market enables it to absorb this expense with minimal impact on profit margins. This ensures that doing business in China remains a net positive for shareholders.

Emerging Applications

Beyond infrastructure, new opportunities are emerging as more advanced AI use cases take shape. For example, Tesla's push to scale its robotaxi business and its decision to replace the in-house Dojo system with one powered by Nvidia highlights the company's role in sophisticated applications like autonomous vehicles. Additionally, Tesla and other developers are racing to commercialize AI-powered robotics, a market that Nvidia CEO Jensen Huang believes could be worth multiple trillions in the long run. Looking ahead, the growing momentum around quantum computing points to the need for next-generation hardware and software, prompting Nvidia to continue innovating to remain at the forefront of the AI story.

Is Nvidia Stock a Buy Before Aug. 27?

The chart below tracks Nvidia's forward price-to-earnings (P/E) multiple throughout the AI revolution. While the company's valuation has expanded recently, shares still trade at a discount compared to prior forward earnings peaks. This suggests that much of the growth from the discussed catalysts is not yet fully reflected in Nvidia's stock price. In other words, there could be meaningful valuation upside as these opportunities scale and contribute to Nvidia's growth.

Although Nvidia's surge over the last three years has been generational, the company's long-term tailwinds suggest that the rally is far from over. For investors, the focus should not be on timing the perfect entry point. Instead, using a strategy like dollar-cost averaging (DCA) to buy the stock at different price points over time remains an effective approach to building a position in one of the defining winners of the AI era.