August 28 could be a massive day for Nvidia stock. Is it a buy right now?

Nvidia (NASDAQ: NVDA) has been one of the most popular artificial intelligence (AI) stocks on the market, and for good reason. It has seen incredible growth quarter after quarter lately and every time, the stock has come out on top of these reports. With Nvidia’s second quarter 2025 results being announced on August 28 after the markets close, investors may want to consider buying Nvidia stock before that date.

However, these results may differ from some of its previous announcements as year-over-year comparisons become increasingly difficult.

Growth will not be as strong as in previous quarters

Nvidia’s growth is tied to its core product: graphics processing units (GPUs). GPUs were developed by Nvidia in the 90s as devices that could process game graphics more efficiently than a CPU. While GPUs excelled in this area, other uses were quickly developed for them.

Because a GPU can process multiple calculations in parallel, it is useful for computationally intensive tasks such as engineering simulations, drug discovery, and AI model training. The latter caused its business to explode, and we’ll have an on-demand check next week when the company releases its latest quarterly results.

For Q2, management told investors to expect $28 billion in revenue. Compared to last year’s Q2 sales of $13.5 billion, this represents a 107% year-over-year increase. That would be an impressive jump, but it would represent a slowdown in the growth rate compared to previous quarters.

This slowdown is happening because we are overlapping the period when the demand for AI really started to take off. I wouldn’t consider doubling revenue a disappointment though. Additionally, don’t be surprised if Nvidia beats this target. It has consistently beaten guidance over the past year, and Wall Street analysts are starting to pick up on that trend. Out of an average of 40 analysts, they collectively expect Nvidia’s Q2 revenue to be $28.5 billion.

While year-over-year revenue growth is an important statistic, there are others that I think are more important to consider, with margin at the top of the list.

Nvidia’s margin will be important to examine

Nvidia’s revenue growth has been nothing short of incredible, but its margin expansion has been even more impressive. With a gross margin of nearly 80% and a profit margin approaching 60%, Nvidia has become one of the most profitable companies to ever trade on the public markets.

When the Q2 report comes out, I’ll be looking to see if the company has maintained or extended these high levels. If investors see weakness in these margins, it’s a sign that Nvidia is facing increased competition and needs to adjust the price of its GPUs to stay competitive in the market.

I don’t expect a margin squeeze, but if one does happen, don’t be surprised if the stock is locked up immediately after the news is released.

Is the stock a buy now?

With Nvidia expected to report another strong quarter, many investors may be wondering if they should invest now, ahead of the report. Investors should first consider that investment success almost never comes from trying to time the market and get in and out of just the right time.

They should also consider how expensive the stock is, trading at nearly 46 times forward earnings estimates.

The stock has a lot of upside, and Nvidia will need to report a strong Q2 and provide impressive Q3 guidance to justify optimism.

For many investors (myself included), the price is too high. But for others, it may still represent a buying opportunity. At this valuation, Nvidia needs to report another year or two of flawless quarters; otherwise, he might be knocked off his perch. If you think it can do that, Nvidia stock could still be interesting here. But given its track record of reporting strong earnings and being rewarded by investors for doing so, if you’re ready to be a buyer, you might want to buy before August 28.

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Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

August 28 could be a massive day for Nvidia stock. Is it a buy right now? was originally published by The Motley Fool