Will Nvidia Stock Soar After May 20? The Evidence is Piling Up, and Here's What It Shows.

Nvidia (NASDAQ: NVDA) has been the go-to stock for investors aiming to bet on the artificial intelligence (AI) revolution. This is because the company designs a product that's crucial for this boom to march on: the AI chip. Of course, many others design AI chips, but Nvidia's graphics processing units (GPUs) have consistently delivered the top performance -- and the company updates them annually to ensure this continues.

This AI strength has resulted in revenue growth in the double or triple digits in recent quarters and years -- and that has prompted investors to pile into the stock. That's helped Nvidia stock advance 1,500% over the past five years. And after a drop in the first quarter of this year, amid general declines in growth and AI stocks, this supercharged stock is back, advancing once again.

Now, something happening in just a few days could potentially offer Nvidia stock a push in one direction or the other. Will Nvidia soar after May 20? The evidence is piling up, and here's what it shows.

Image source: Getty Images.

The leading AI chip designer

Before we dive in, let's consider why Nvidia has been so popular among investors over the past few years. As mentioned, the company sells the market's leading AI chips -- this, along with the commitment to innovation, offers investors a certain level of visibility on potential revenue moving forward.

It's also important to note that Nvidia's sales come with a high level of profitability, as we can see through the company's gross margin. This metric has generally surpassed 70% over the past several quarters. And as Nvidia ramps up production of its systems, it's likely to become more efficient, ensuring that gross margin remains high.

Finally, Nvidia's chips and related products and services aren't just useful in the early stages of the AI boom, when the training of models has been the focus. They are also essential as AI is used. For example, when an AI model is put to a task, it relies on chips to power its "thinking" process. So Nvidia's systems will be just as necessary in the coming stages of the AI story as they were in the earliest stages.

Investors have liked all of these points, and that's why they've flocked to Nvidia -- and pushed the stock higher.

A potential catalyst for Nvidia stock

Now, let's consider the potential catalyst that's just days away. Nvidia is scheduled to report its fiscal 2027 first-quarter earnings on Wednesday, May 20, after the closing bell. The company has a history of positive earnings surprises, having surpassed estimates over at least the past four quarters.

Nvidia has predicted revenue of $78 billion for the quarter, which would represent a 77% gain from the year-earlier period, and gross margin of more than 74%. And in the latest earnings report back in February, as well as during the company's GTC conference in March, Nvidia spoke of ongoing high demand for its products and services -- including the upcoming Vera Rubin platform.

Will Nvidia soar after the May 20 earnings report? History shows us that, though Nvidia doesn't have a clear history of climbing after every report, it has advanced after recent first-quarter reports.

It's performed as follows in the five trading days after its past three first-quarter earnings reports:

Why does the first quarter stand out?

Why has the first quarter resulted in such positive momentum? One reason may be specific to Nvidia, and that's the fact that its latest GPU releases have come in the latter part of the year. So, as Nvidia offers updates in the May report, speaking of demand for the new systems and their performance, investors might be feeling particularly optimistic about growth ahead.

Meanwhile, positive elements unrelated to Nvidia have emerged at this time of year -- for example, last year, progress on U.S. import tariff agreements boosted investor confidence. Today, any steps toward peace in Iran could do the same.

Evidence shows us that Nvidia stock after the past 12 quarterly reports slipped seven times in the five days to follow -- but, as shown above, it's gained every time after a first-quarter report. So, while a gain isn't guaranteed, this period has shown itself to be the most positive -- and that's fantastic news for Nvidia shareholders as May 20 approaches.

Adria Cimino 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.