Should you buy Nvidia stock before November 20th? The evidence is piling up, and here’s what it suggests.

The adoption of artificial intelligence (AI) continues at a rapid pace, but some are waiting for the other shoe to drop. A strengthening US economy and strong quarterly results from several artificial intelligence-related companies have helped accelerate growth in the US economy. Nasdaq Composite to a new record high last week. However, these same factors have some investors wondering whether the bull market has gone too far, too fast.

Nvidia (NASDAQ: NVDA) has become the de facto standard bearer of the generative artificial intelligence industry. The company plans to report fiscal 2025 third-quarter results in less than three weeks, and it wouldn’t be a stretch to suggest that Wall Street is on pins and needles awaiting clues the report will provide about the state of AI adoption. Nvidia’s sales have surged since the start of last year, causing Nvidia shares to rise 833% (as of this writing). It is also less than 5% below the all-time high it reached late last month.

With a lot riding on Nvidia’s upcoming earnings report, many shareholders are wondering whether the stock can continue its meteoric rise. Should you buy the stock ahead of its November 20 earnings report? Fortunately for investors, data has begun to accumulate that may help answer this question.

Image source: Getty Images.

Sun on a cloudy day

The key to Nvidia’s stunning gains over the past couple of years has been the performance of its graphics processing units (GPUs), which are the best chips for delivering the specific type of computing power needed for generative AI, as well as other types of cloud computing. computing needs. The resources required and the massive volumes of data involved limit the use of top-tier AI models to only the world’s largest technology companies and cloud providers, most of which are Nvidia customers. Comments made in the wake of these tech giants’ recent quarterly results provide some insight into the state of the artificial intelligence revolution—and the evidence is clear.

For example, Microsoft (NASDAQ: MSFT) said it spent heavily to advance its artificial intelligence program in the first quarter of fiscal 2025 (which ended Sept. 30). The company’s capital expenditures (capex) amounted to $20 billion, which mainly went to support demand associated with “clouds and artificial intelligence.” CFO Amy Hood expects Microsoft’s spending growth to continue: “We expect capital spending to increase sequentially given demand signals for our cloud and artificial intelligence,” she said.

For Alphabet‘s (NASDAQ: GOOGLE) (NASDAQ:GOOG) In its third-quarter earnings call, CEO Sundar Pichai said, “Implementing artificial intelligence (capabilities) requires… significant capital investment.” The company reported $13 billion in capital expenditures for the quarter and suggested there would be a “significant increase in capital expenditures…” in 2025.

Rounding out the top three largest cloud providers, Amazon (NASDAQ: AMZN). During his third-quarter earnings call, CEO Andy Jassy called generative technology “a possibly once-in-a-lifetime opportunity…we’re aggressively pursuing it.” CFO Brian Olsavsky put that into context by saying Amazon’s capex this year will be roughly $75 billion, much of which will go toward cloud computing and artificial intelligence infrastructure. The company also said it will unveil “100 new cloud infrastructure and artificial intelligence capabilities” at AWS re:Invent later this month.

Finally there is Meta platforms (NASDAQ: META). Although it is not a cloud provider, the company’s social networking sites attract 3.29 billion people every day, providing Meta with massive amounts of user data. The company raised its full-year capital expenditure forecast to about $39 billion, with Chief Financial Officer Susan Lee saying, “We continue to expect significant growth in capital expenditures in 2025.” She previously noted that this was done to “support our artificial intelligence research and product development efforts.”

Why is this important

The trend toward accelerating capital investment to support growing demand for AI is clear. Additionally, a significant portion of this money will be spent on the data centers and servers needed for cloud computing, where much of the generative AI software resides. So Nvidia will likely receive a significant portion of these expenses.

Nvidia has historically remained silent about its biggest customers, but that hasn’t stopped Wall Street from doing some digging. Bloomberg and Barclays Research analysts analyzed the numbers and concluded that Nvidia’s four largest customers, generating a total of 40% of its sales, are:

• Microsoft: 15%

• Metaplatforms: 13%

• Amazon: 6.2%

• Alphabet: 5.8%

Each of these companies left no doubt about their plans to spend heavily on capital expenditures, particularly on infrastructure to support their cloud computing and artificial intelligence aspirations. As a leading supplier of GPUs for the data center, Nvidia will likely continue to lead the list of beneficiaries of this spending.

Mark your calendar

Nvidia will release its next quarterly report on November 20th. After achieving triple-digit annualized percentage growth for five straight quarters, the company tried to rein in market expectations by suggesting its revenue would increase this time around. it will only be about 79%. While this would be a slowdown in growth, it would still be significant growth by any stretch of the imagination.

Investors looking to make money in the next three weeks may be disappointed. No one can say for sure how Nvidia shares will react to the report, even if the company beats expectations.

To be reminded of the difficulties associated with short-term forecasting, investors need only look back to this summer, when Nvidia shares lost as much as 27% of their value starting in mid-June on fears that its next-generation Blackwell AI processors would be delayed – only to to come back roaring. This was an illustration of how volatility is part of the cost of entry for these stocks. Still, both comments from big tech clients and their historical spending patterns suggest Nvidia is poised for continued strong growth.

For investors looking for stocks that can be held for years and decades rather than weeks and months, Nvidia is an obvious choice to benefit from the artificial intelligence revolution. And it remains attractively priced at about 32 times next year’s earnings. I can’t say for sure what stocks will do between now and November 20th. What I can say – with a fair degree of confidence – is that investors who buy Nvidia stock soon and hold it for three to five years or others will be very glad they did.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, chief executive of Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former chief market development officer and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Danny Vena holds positions at Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 Microsoft calls and short January 2026 $405 Microsoft calls. The Motley Fool has a disclosure policy.