2 Incredibly Simple Reasons to Buy Nvidia Stock Hand Over Fist Before Nov. 20

Nvidia‘s (NVDA 4.07%) artificial intelligence (AI)-powered surge has continued in 2024. Cloud service providers, governments, and anyone looking to jump on the AI bandwagon have been lining up to buy the company’s graphics processing units (GPUs) to train and deploy AI models.

Shares of the semiconductor bellwether are up 173% this year. A closer look at recent developments in the AI ecosystem will tell us that the stock’s surge is likely to continue, with the company’s upcoming fiscal 2025 third-quarter earnings likely to act as a catalyst. The chipmaker will release its fiscal Q3 results (for the three months ended Oct. 27) on Nov. 20.

Let’s see why it may be a good idea to buy this high-flying AI stock before its earnings are released.

Nvidia is crushing the competition

Nvidia competes in the AI chip market with Advanced Micro Devices (NASDAQ: AMD) and Intel (NASDAQ: INTC). However, AMD’s latest results indicate that it is nowhere near Nvidia in the market for AI graphics processing units (GPUs). In Q3 2024, AMD’s data center business recorded a 122% year-over-year spike in revenue to $3.5 billion. For comparison, Nvidia’s data center revenue in the second quarter of fiscal 2025 (which ended in July) was much higher at $26.3 billion.

What’s worth noting here is that Nvidia’s data center revenue jumped a stunning 154% year over year in the last reported quarter, despite its big size. Moreover, AMD sells both server GPUs and central processing units (CPUs), but it has not been able to gain as much traction in the AI chip market as Nvidia has managed.

Intel, meanwhile, remains further behind. It was originally expecting to sell $500 million worth of AI GPUs this year. However, on its latest earnings conference call, Intel management pointed out that the “overall uptake of Gaudi has been slower than we anticipated.” As a result, Intel won’t be able to hit its $500 million revenue target this year, suggesting that it won’t be causing Nvidia much trouble.

AMD, on the other hand, expects AI GPU sales of $5 billion in 2024. Those numbers are way lower than the value of AI GPUs Nvidia sells in just one quarter and confirm that Nvidia continues to remain the dominant force in the AI chip market. After all, at the current revenue run rate, Nvidia could end the current year with $84 billion in AI GPU revenue.

If you add up the potential AI GPU revenue forecasts of Nvidia, AMD, and Intel, it becomes evident that Nvidia is controlling more than 90% of this market right now. More importantly, its competitors haven’t been able to make any significant inroads in the AI chip market even after two years. As such, Nvidia remains in a terrific position to corner most of the spending on AI GPUs.

The data center AI accelerator market is forecast to hit $500 billion in annual revenue in 2028, according to AMD’s estimates, and Nvidia’s rock-solid market share means that it is in pole position to make the most of this market.

Big technology companies are going to spend more on AI infrastructure

Another key theme that has emerged from the latest earnings reports of big technology players such as Meta Platforms (NASDAQ: META) and Microsoft (NASDAQ: MSFT) is that they will continue to spend big bucks on building AI infrastructure.

Meta Platforms, for instance, has raised the lower end of its capital expenditure (capex) forecast for 2024. It now expects to spend between $38 billion and $40 billion in capex this year, as compared to the earlier range of $37 billion to $40 billion. However, the company has also added that it expects “a significant acceleration in infrastructure expense growth next year.”

Meta CEO Mark Zuckerberg points out that the company’s AI efforts will require more investment if the company is to make the most of this technology. On the latest earnings conference call, Zuckerberg pointed out:

First, it’s clear that there are a lot of new opportunities to use new AI advances to accelerate our core business that should have strong ROI over the next few years. So, I think we should invest more there.

And second, our AI investments continue to require serious infrastructure, and I expect to continue investing significantly there too.

Microsoft is also spending a ton of money on AI infrastructure. Its capex in the first quarter of fiscal 2025 came in at $20 billion, which was a significant jump over the $11.2 billion it spent in the same quarter last year. It’s worth noting that Microsoft spent $55.7 billion in capex in fiscal 2024, and the company’s fiscal 2025 Q1 outlay points toward a significant acceleration on this front.

In fact, Microsoft management says that it expects “capital expenditures to increase on a sequential basis given our cloud and AI demand signals.” All this tells us that the demand for AI hardware is going to remain strong and help Nvidia sustain the impressive growth it’s been clocking.

Consensus estimates compiled by Yahoo! Finance are projecting Nvidia to deliver $32.9 billion in fiscal Q3 revenue when it releases its quarterly report later this month. The company’s earnings are expected to double on a year-over-year basis to $0.74 per share. The chipmaker guided for $32.5 billion in revenue at the midpoint when it released its previous results in August, which means that analysts are expecting stronger growth from the company.

The continued strength in AI hardware demand, along with the capacity expansion efforts of Nvidia’s manufacturing partner, indicate that it could end up exceeding consensus estimates, a scenario in which this high-flying AI stock could get a nice shot in the arm. Given that Nvidia is now trading at an attractive 35 times forward earnings as compared to the U.S. technology sector’s average of 45, investors have another solid reason to buy this stock before it releases its quarterly results on Nov. 20.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short November 2024 $24 calls on Intel. The Motley Fool has a disclosure policy.