Is Nvidia About to Soar? Here's What History Says.

Nvidia (NASDAQ: NVDA) has delivered enormous returns over the past few years, and this is for one main reason: The company has demonstrated its leadership and revenue potential in the high-growth area of artificial intelligence (AI). Nvidia dominates the AI chip market, selling the most powerful graphics processing units (GPUs), and that's resulted in double and triple-digit revenue growth during this AI boom. And as a result, the stock, too, has climbed.

But, in recent months, Nvidia's performance has been lackluster. This isn't due to any particular piece of news from the company, but instead to general headwinds: Investors have questioned whether AI spending may continue at current levels -- if it doesn't, that could hurt many AI companies, including Nvidia. At the same time, geopolitical problems, such as the war in Iran, and economic woes have weighed on investors' minds too.

As we approach the second quarter of the year, investors may now be wondering whether Nvidia will continue along this path or gather fresh momentum. After a first quarter of turmoil, is Nvidia stock about to soar? Here's what history says.

Image source: Getty Images.

From the GPU to NemoClaw

Before diving in, let's take a look at Nvidia's position in the world of AI. Over the past several years, the tech giant has built out a full portfolio of AI products and services. Yes, Nvidia jumped to the forefront thanks to its GPUs because they power essential AI tasks like training and inference -- and they're the fastest on the market. But the company has expanded beyond the GPU into other related tools -- and most recently announced NemoClaw, a system to help customers more safely use the popular AI agent OpenClaw.

At the same time, Nvidia is following through on its promise to release chip updates on an annual basis. It's already launched Blackwell, followed by Blackwell Ultra, and the company is on schedule to introduce the Vera Rubin platform later this year.

All of this has kept top tech customers loyal as they know that by sticking with Nvidia, they're getting the most efficient and powerful tools available to advance their programs. Quality and speed are essential for these customers since they're eager to reach the finish line as soon as possible.

This has resulted in significant growth for Nvidia over the past few years, with revenue in the latest full year reaching more than $215 billion -- and this is at a high level of profitability on sales as gross margin in recent times has generally surpassed 70%.

A look at a very relevant time period

Though this powered the stock higher over the past few years, as mentioned, recent times have been tough. Now, let's consider what may happen next, according to history.

We'll look back at the past three years, because this is a period that is the most relevant -- it's when the general market turned its attention to the AI story.

And here's what history shows: In each of the past three calendar years, Nvidia advanced in the double digits during the second quarter, rising 52% in that period of 2023, 36% in 2024, and 45% last year.

So if we listen to what history, alone, has to say, the answer is clear: Nvidia is set to soar over the coming three months.

It's important to note, though, that history isn't always right, and any corporate, industry, geopolitical, or economic news could interrupt a particular market pattern. For example, even if Nvidia's business is going strong, prolonged turmoil in Iran or poor economic data in the U.S. could weigh on the performance of growth stocks -- such as Nvidia. This is because, during times of uncertainty or trouble, investors often turn to stocks viewed as safer, such as pharmaceutical players or dividend stocks.

That said, we do have two bits of good news here: If Nvidia follows the recent historical pattern, the stock may surge in the second quarter. And even if it doesn't, this AI leader still has the growth and AI portfolio to potentially push it to enormous gains over the long run.

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.