Should You Buy Nvidia Before August 28th? Here’s what billionaire CEOs are saying.

All eyes turn to again Nvidia (NASDAQ: NVDA) this week.

The artificial intelligence (AI) chip superstar is set to report results for the second quarter of fiscal 2025 (which ended July 28) after hours on Wednesday, August 28. As with the last quarterly reports, the results are highly anticipated.

Nvidia is getting a lot more attention these days thanks to its role as a leader in the generative AI revolution. OpenAI’s release of ChatGPT has accelerated demand for graphics processing units (GPUs) and other more advanced components that many companies use to run complex AI models.

There is a lot of speculation about the upcoming earnings report, as Nvidia’s results could heavily influence whether the stock market, driven by the AI ​​boom, continues its upward trend, or whether it backs off on concerns about a potential AI bubble.

It’s impossible to consistently predict a company’s quarterly results or the market’s reaction to them, but watchers of Nvidia stock have an advantage: Most of its big tech peers have already reported second-quarter earnings, and their CEOs have commented on the situation current. in the emerging AI industry. For investors, there were some key pieces of information that provide clues about Nvidia’s performance in the second quarter.

Demand for Nvidia products is alive and well

While there has been some concern in the stock market that AI stocks could enter a bubble, especially when Nvidia and its peers’ shares fell sharply in July through early August, it is clear that there is still a shortage of Nvidia components, as companies add and expand rapidly. new data centers.

Speaking further adzeOn his second-quarter earnings call on July 23, CEO Elon Musk not only paid Nvidia a big compliment, but emphasized its product’s limited offering, saying:

There’s no doubt from Musk’s statement that the supply-demand imbalance that drove Nvidia hardware prices up and sales growth persisted in the second quarter.

Similarly, Meta platforms CEO Mark Zuckerberg offered his thoughts on the evolution of the AI ​​market on the July 31 earnings call, saying: “We expect that sufficient computing power will be critical to many of these opportunities, so we are investing significantly in infrastructure to support or core AI activity. , in content ranking and ads, as well as in generative AI and our advanced research efforts.”

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Phrases like “having enough computing power” and “investing significantly in infrastructure (AI)” essentially mean “buying Nvidia components”.

Meta CFO Susan Li also made it clear that this trend will continue to grow as she said, “Our expectation, obviously again, is that we will significantly increase investment in AI infrastructure next year,” which bodes well for Nvidia.

Zuckerberg detailed his thinking and that of many of his colleagues during a podcast interview with a Bloomberg reporter. He acknowledged that there is a risk of overspending on AI infrastructure, but added that the bigger risk is underinvestment, “because the downside of being left behind is that you’re not positioned for the most important technology for the next 10 to 15 years. .”

Alphabet CEO Sundar Pichai echoed that sentiment, saying on the company’s recent earnings call, “When we go through a curve like this, the risk of underinvestment is dramatically greater than the risk of overinvestment for us here.”

Is Nvidia a buy ahead of its earnings report?

For Nvidia investors, the above statements should provide some reassurance that business continued to grow in the fiscal second quarter, as financial reports and statements from the “Magnificent Seven” companies indicated that spending on AI infrastructure continued to increase and the giants techies like Meta Platforms expect it. to continue to do so next year.

Whether Nvidia stock gains in its earnings report will depend on how its results compare to analyst estimates. The average Wall Street analyst currently expects revenue of $25.64 billion in the quarter, up 90% from the year-ago quarter, and calls for adjusted EPS to rise from 1.19 dollars in the second quarter of 2024 to $2.45.

The CEO’s statements above aren’t a guarantee that Nvidia will grow its earnings report, but they do provide strong evidence that the AI ​​chip titan has a bright future ahead as major tech companies plan to continue buying its product.

That’s reason enough to buy Nvidia stock ahead of earnings, regardless of how it moves on Thursday.

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Suzanne Frey, chief executive at Alphabet, is a member of the Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. Jeremy Bowman has positions in Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Nvidia and Tesla. The Motley Fool has a disclosure policy.

Should You Buy Nvidia Before August 28th? Here’s what billionaire CEOs are saying. was originally published by The Motley Fool