TLDR:
- Nvidia stock has historically jumped after Q1 earnings reports in May for the past two years
- Currently trading at forward P/E of 26, similar to levels in May 2023 and 2024 before price jumps
- CEO Jensen Huang will deliver keynote at Computex on May 19, potentially announcing new products
- Despite $5.5 billion write-off due to China export restrictions, AI customers haven’t changed spending plans
- Trump’s tariffs have caused recent price dips, but electronics like AI chips currently have temporary exemptions
Nvidia’s stock has shown a pattern over the past two years that might excite investors looking for an opportunity. The chip giant has experienced significant price jumps following its first-quarter earnings reports in both May 2023 and May 2024, and the current setup looks remarkably similar.
The stock is currently trading at a forward price-to-earnings ratio of around 26, almost exactly where it was during the previous two Mays before those jumps. After strong Q1 reports and positive guidance, the stock typically moves into the mid-30s to mid-40s P/E range.
This pattern has caught the attention of market watchers who see the current price weakness as a potential buying opportunity before Nvidia’s upcoming earnings report on May 28.
Investor concerns have pushed the stock below its recent highs. These worries center around President Trump’s import tariff plans and fears of an economic slowdown.
However, while these concerns are real, the company’s fundamentals remain strong. Nvidia continues to dominate the market for GPUs used in AI model training and data centers.
Tariff Concerns and Export Restrictions
One challenge facing Nvidia is the changing trade landscape. While Trump has temporarily exempted electronics products like AI chips from tariffs, this exemption isn’t permanent.
The company also faces headwinds from U.S. government restrictions on chip exports to China. These export rule changes forced Nvidia to take a $5.5 billion writedown in the current quarter.
Despite these challenges, Nvidia has positioned itself well to handle potential trade issues. The company recently announced plans to increase production in the United States.
With $43 billion in cash reserves, Nvidia has the financial strength to weather these trade storms while continuing to invest in product development.
Upcoming Computex Keynote
Investors will be watching closely when CEO Jensen Huang delivers the keynote address at Computex, a major AI conference in Taiwan, on May 19.
Huang is known for making important product announcements during these presentations. During his March keynote at GTC, he revealed the roadmap for upcoming launches, including the Blackwell Ultra chip and the Vera Rubin architecture.
According to some reports, Nvidia and partner MediaTek may announce their Arm Holdings-based processors for PCs during the event. This would represent an important expansion into Windows systems running on Arm processors.
Huang might also provide updates on the Blackwell rollout and the company’s plans for manufacturing in the United States.
Long-Term Growth Potential
Looking beyond short-term price movements, Nvidia’s long-term growth story remains compelling. The company believes data center capital expenditures will reach $1 trillion annually by 2028, up from around $400 billion in 2024.
This growth forecast is supported by recent earnings reports from major AI hyperscalers. These customers have maintained their massive capital expenditure plans for AI data centers, despite economic headwinds.
The tens of billions of dollars these companies plan to spend on cloud infrastructure should fuel Nvidia’s growth for years to come.
For investors with a long-term perspective, the current price represents a reasonable entry point. While timing the market precisely is impossible, buying at today’s forward P/E of 26 offers a favorable risk-reward ratio.
Even if the stock rises after Computex announcements or the May 28 earnings report, long-term investors should still find value in holding Nvidia shares as the AI revolution continues to unfold.
As Nvidia continues to dominate the AI chip market, its position as the key supplier for companies racing to build advanced AI systems remains secure. The current price weakness may prove to be a May buying opportunity, just as it has been for the past two years.
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