History Says Nvidia Is Going to Disappoint Wall Street After Aug. 26

Although the bulk of earnings season is now in the rearview mirror, arguably the most consequential report is yet to come.

After the closing bell on Aug. 26, the face of the artificial intelligence (AI) revolution, Nvidia (NASDAQ: NVDA), will lift the hood on its latest quarterly operating results. As has been customary for much of the last four years, Nvidia is expected to blow past Wall Street's consensus sales and profit forecasts. But if history rhymes, once again, it won't be enough to drive the company's lofty valuation higher.

Image source: Nvidia.

Nvidia has made a habit of crushing analysts' estimates

Based on current estimates, Nvidia is expected to deliver nearly $91.9 billion in fiscal second-quarter sales (up 96% from the year-ago quarter) and earnings per share (EPS) of $2.08. With an average EPS beat of $0.065 over the last four quarters, Nvidia is hurdling profit expectations by roughly $1.5 billion per quarter.

There's no secret to Nvidia's formula for success. The company's graphics processing units (GPUs) are superior, and Wall Street's most influential businesses have shown a willingness to pay a premium for the best products in the AI arena. With no competitors particularly close to matching or surpassing the compute capabilities of Nvidia's core GPU lineup, it's been able to charge a hearty premium.

NVDA Gross Profit Margin (Quarterly) data by YCharts.

Additionally, Nvidia has been buoyed by a persistent GPU supply shortage. When demand for a good or service outstrips its supply, prices go up until demand tapers off. With no immediate end in sight to this GPU supply demand mismatch, Nvidia has consistently raked in a gross margin of around 75%.

Unfortunately for investors, Nvidia's headline figures tell only part of the story.

Image source: Getty Images.

History shows that losing streaks often follow Nvidia's operating results

Although history can't guarantee what's to come on Wall Street, past events have an uncanny ability to predict the future more often than not. In Nvidia's case, history predicts another losing streak following its upcoming earnings release.

Following each of Nvidia's previous four earnings releases, its shares have endured at least a two-day losing streak:

• Q1 2027: (1.77%) decline the following day / (3.64%) two-day decline
• Q4 2026: (5.46%) / (9.39%)
• Q3 2026: (3.15%) / (4.10%)
• Q2 2026: (0.79%) / (4.09%)

On average, Nvidia stock has dropped 2.79% the day after it reports its operating results and 5.31% over the two days following its quarterly earnings. For context, a 5.31% decline would shave $290 billion off Nvidia's valuation, based on its Aug. 13 close.

These persistent sell-offs after earnings likely reflect the otherworldly expectations that investors have placed on the face of the AI revolution. There's simply no earnings beat or sales/profit guide that would be sufficient to satisfy these lofty expectations.

Furthermore, historical headwinds are still working against Nvidia. Since the mid-1990s, we've yet to see a game-changing technology avoid an eventual bubble-bursting event early in its expansion.

AI finds itself on a path similar to the internet. While early adoption wasn't an issue for either game-changing technology, it took businesses until well after the dot-com bubble burst to optimize internet-based solutions. It'll likely take years before businesses are able to optimize AI solutions to boost sales and profits.

If history rhymes, yet again, Aug. 27-28 will mark a rough stretch for Nvidia's shareholders.

Sean Williams 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.