Key Points
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Nvidia reported double-digit revenue growth and significant profitability on sales in the third quarter.
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Nvidia and its major customers — from Amazon to Alphabet — say demand for AI products and services remains strong.
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Nvidia (NASDAQ: NVDA), reporting earnings that blew past analyst expectations, once again wowed investors — this is at least the fifth consecutive time that’s happened. The world’s top designer of artificial intelligence (AI) chips has seen remarkable growth thanks to high demand for these essential AI tools.
All of this has powered Nvidia shares higher and helped investors generate big returns. For example, Nvidia stock has soared a mind-boggling 1,000% over the past five years. But in the Nov. 20 trading session, which followed its latest quarterly report, Nvidia stock disappointed investors — the stock fell about 3%. This was amid low expectations for a fresh interest rate cut in December, and separately, as worries about a potential AI bubble continued to brew.
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Considering the complete picture, should you buy Nvidia stock after this blowout earnings report? Here’s what history says.
Image source: Getty Images.
A focus on the AI market
Before diving into the latest Nvidia numbers, let’s take a quick look at this company’s story so far. Nvidia, seeing the potential of AI, shifted focus several years ago and designed its graphics processing units (GPUs) — AI chips — to specifically serve the AI market. The company got in early on this valuable market and, as a result, secured leadership. Over the past several quarters, this has translated into double- and triple-digit earnings growth and spectacular stock performance.
Nvidia’s GPUs are a crucial element in the development and use of AI, meaning the company could win through every chapter of the AI story. And today, we’re seeing this unfold. Major cloud service providers are turning to Nvidia for GPUs to ramp up their data centers, and companies across industries are relying on Nvidia’s AI platforms to run their projects.
Now, let’s move along to the latest earnings report. In the third quarter of the 2026 fiscal year, Nvidia said revenue jumped 62% to $57 billion, and the company maintained a high level of profitability on sales — we can see this through the gross margin level of more than 73%.
Soaring Blackwell sales
Importantly, Nvidia said sales of its latest Blackwell platform are “off the charts” and “compute demand keeps accelerating.” Nvidia’s customers — from Amazon to Alphabet — support this message as they, too, spoke of high AI demand in their recent earnings reports. And rival chip designers such as Broadcom and Advanced Micro Devices also have spoken of AI customers rushing to get in on compute. So, with the leading players all in agreement regarding AI growth prospects, there’s reason to be optimistic about the long-term AI picture.
Now, let’s return to our question: Should you buy Nvidia after this fantastic report? History is in favor of the move — if we look at the past nine quarterly earnings reports, Nvidia advanced seven times in the six months that followed. And each time, Nvidia gained in the double digits, while the two losing periods delivered a loss in the single digits and a decline of less than 1%. So, history tells us that Nvidia has a strong track record of performance in the several months following its earnings reports.
Before pressing the “buy” button, though, it’s important to remember that history isn’t always right, and it’s also key to keep in mind that various outside elements can impact a stock’s performance. So, even if Nvidia’s business is going strong, concerns about the general interest rate environment and economy may weigh on stock performance.
Consider the long-term picture
So, what’s an investor to do? Look beyond the potential six-month performance and instead consider where Nvidia will be a few years down the road — and take a look at the stock’s current valuation. Nvidia, as the AI chip leader, should benefit from the trillions of dollars that may be spent over the coming years on AI infrastructure. And customers are likely to turn to Nvidia’s compute as they apply AI to real-world problems — GPUs are a necessary tool here.
Meanwhile, today, Nvidia stock is trading for 38x forward earnings estimates, a reasonable price for the leader of a major growth industry.
So, history suggests that a purchase of Nvidia now might reward you in six months — but even if it doesn’t, the good news is that it is still likely to supercharge your portfolio over the long term.
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Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.