Should I buy Nvidia stock before 28 August?

It’ll soon be crunch time for Nvidia stock and this Fool’s wondering whether to invest in the AI leader before Q2 results are released.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Nvidia (NASDAQ: NVDA) stock will likely swing wildly one way or the other when the artificial intelligence (AI) chipmaker reports its second-quarter (Q2) results on 28 August. I doubt the response will be muted.

While the share price has fallen more than 20% in less than a month, all signs point towards another great quarter. Every time the firm’s reported one of these, the stock’s surged to a fresh record high.

However, there’s currently a tech stock sell-off gathering pace. So should I invest now or not?

Should you invest £1,000 in Legal & General right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Legal & General made the list?

See the 6 stocks

Created with Highcharts 11.4.3Nvidia PriceZoom1M3M6MYTD1Y5Y10YALL5 Aug 20195 Aug 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

Continued spending

Encouragingly for Nvidia, there doesn’t appear to be any slowdown in AI spending, at least according to recent earnings from the tech giants snapping up its chips by the boatload.

  • Meta Platforms plans to spend about $38.5bn in 2024 on AI infrastructure.
  • Alphabet expects to splash out another $12bn or so in the next two quarters, which will be “predominantly driven” by AI investments.
  • Amazon CEO Andy Jassy said: “We are investing a lot across the board in AI and we’ll keep doing so as we like what we’re seeing”.
  • Tesla CEO Elon Musk recently lamented that “demand for Nvidia hardware is so high that it’s often difficult to get the GPUs”.
  • Microsoft just reported $19bn in capital expenditures in the last quarter.

Needless to say, all this spending bodes well for Nvidia’s Q2 numbers on 28 August and probably Q3 too. Therefore, it wouldn’t surprise me to see the stock bounce back strongly once markets stabilise.

Amara’s Law

However, I’m a long-term investor who buys stocks with a minimum holding period of five years in mind. And right now, I have absolutely no idea what AI spending will look like in 2029.

If it’s far less than today, then I expect Nvidia’s market-cap and share price will reflect that. On the other hand, spending could head higher but Nvidia sells less chips due to more competition.

All this brings to mind ‘Amara’s Law’, which came from Roy Amara, the Stanford computer scientist. He said: “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”

Like the internet, AI will almost certainly transform the world in the long run. But we may be overestimating the technology’s impact right now. An AI bubble might be popping. This is the worry I have.

The trough of disillusionment

According to the Gartner Hype Cycle, the adoption of new technologies (like AI) follows five phases:

  • Innovation Trigger
  • Peak of Inflated Expectations
  • Trough of Disillusionment
  • Slope of Enlightenment
  • Plateau of Productivity

The innovation trigger was the release of ChatGPT in late 2022. We may already have hit the peak of inflated expectations. One fund manager, for example, recently said that Nvidia could reach a $50trn market-cap!

Nobody knows when the so-called trough of disillusionment will come. But more analysts are questioning the return on investment in the AI space, so I reckon it’s in the post.

If Nvidia’s value keeps falling because investors become disillusioned with AI, then I’d consider investing due to the firm’s incredible innovation and world-class management team. But I don’t think we’re in the trough yet.

So in the meantime, I’ll buy other stocks while watching from the sidelines.

Should you buy Legal & General shares today?

Before you decide, please take a moment to review this first.

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Claim your free copy now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Ben McPoland has positions in Alphabet and Tesla. The Motley Fool UK has recommended Alphabet, Amazon, Gartner, Meta Platforms, Microsoft, Nvidia, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

At a 52-week low but forecast to rise 73%! Is this growth share the FTSE’s top recovery play? 

This FTSE 100 growth share has taken an absolute beating over the past two years but Harvey Jones says the…

Read more »

Investing Articles

This FTSE 250 share offers a juicy 9.8% yield. Will it last?

This well-known FTSE 250 share has a percentage dividend yield approaching double digits. Should Christopher Ruane add the income share…

Read more »

Investing Articles

Is a £333,000 portfolio enough to retire and live off passive income?

A third of a million pounds can generate a serious amount of passive income, but relying on this sum alone…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing For Beginners

Why FTSE 100 investors should pay attention to ‘Liberation Day’

Jon Smith explains why the upcoming tariff announcement from across the pond could have an impact on the FTSE 100,…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

Here’s why Nvidia stock fell 13% in March

The Nvidia stock price rise was looking unstoppable. Should investors now be wondering if the same might be true of…

Read more »

US Stock

It’s ISA deadline week! Here’s my 3-step game plan

Jon Smith tries to calm the hype around the last minute ISA rush to buy stocks and explains why he's…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

£10,000 invested in BAE Systems shares at Christmas is now worth…

BAE Systems shares have been surging in the FTSE 100 in 2025, driven higher by the wavering US commitment to…

Read more »

Investing Articles

Up 19% in 2 weeks, can the Tesla share price rebound further?

Tesla's first-quarter delivery numbers came out today. Will they help persuade our writer to invest his money at the current…

Read more »