Nvidia Reports Earnings Next Month. Here's Why I'm Not Buying the Stock Before the Report.

Artificial intelligence (AI) chipmaker Nvidia (NASDAQ: NVDA) reports its fiscal first-quarter results next month, on May 20. And we can say with near certainty that the numbers will look impressive.

After all, the company's most recent quarterly update was exceptional. In its fiscal fourth quarter of 2026 (the period ended Jan. 25, 2026), revenue rose 73% year over year to $68.1 billion. Data center revenue, specifically, climbed 75% year over year to $62.3 billion. And earnings per share nearly doubled.

Further, management guided for fiscal first-quarter revenue of $78 billion, plus or minus 2%. That would represent another sequential step higher from fiscal Q4.

So why wouldn't I want to buy the stock before the report, especially with shares trading at a compelling-looking forward price-to-earnings ratio of just 25 as of this writing?

My concern is rising competition.

Image source: Getty Images.

Nvidia is still the dominant AI chip platform

Highlighting how dominant Nvidia remains, just look at its pricing power, evident by its incredible profit margins. Nvidia's gross margin was 75% in fiscal Q4, up from 73% in the year-ago period.

These lucrative margins are a key part of the bull case. Nvidia isn't just selling a lot of chips; it is selling them at very high margins because its graphics processing units (GPUs) -- chips used to accelerate AI computing -- remain the standard for much of the infrastructure build-out. And its importance in the AI era is only strengthening as agentic AI gains momentum.

"Enterprise adoption of agents is skyrocketing," said Nvidia CEO Jensen Huang in the company's earnings release. "Our customers are racing to invest in AI compute -- the factories powering the AI industrial revolution and their future growth."

It's becoming increasingly clear that these are still early days for the AI infrastructure build-out, and Nvidia is unquestionably at the center of it -- and customers have to pay up to get in on this momentum.

But there are still risks.

Competition is showing up everywhere

The main reason I'm hesitant to buy Nvidia stock before earnings is that competition seems to be intensifying.

Starting with semiconductor and infrastructure software specialist Broadcom (NASDAQ: AVGO), its AI semiconductor revenue increased 106% year over year to $8.4 billion in Q1.

Sure, Broadcom's AI business is different than Nvidia's; a lot of its AI opportunity is in accelerators for more specific tasks. Still, even though Broadcom's chips can't address AI as broadly as Nvidia's, they're sometimes a better fit than Nvidia's chips for certain tasks.

E-commerce and cloud computing giant Amazon (NASDAQ: AMZN) is another example. In its annual shareholder letter released earlier this month, the company said its Trainium, Graviton, and Nitro chips business now has a combined annual revenue run rate of more than $20 billion and is growing at a triple-digit year-over-year rate. And in an expanded collaboration announced earlier this week, Anthropic made commercial commitments to current and future generations of Amazon's Trainium chips.

That said, Amazon will likely remain a significant Nvidia customer, given its seemingly insatiable appetite for AI infrastructure.

Then there is tech giant Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). The company recently announced its eighth-generation tensor processing units (TPUs).

Why I'm waiting

To be fair, there's a good chance Nvidia reports better-than-expected results next month. The company's guidance already points to another huge quarter.

But I worry that the competition narrative could heat up further and eventually weigh on the company's growth rates and -- even worse -- its sky-high profit margins.

Of course, just because I'm not buying Nvidia stock today doesn't mean selling is the right decision. Nvidia remains one of the best-positioned companies in the AI space, and it's difficult to articulate a good bear case for the stock. I'm just personally not interested in buying at this valuation. If shares sold off, however, I might reconsider.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Broadcom, and Nvidia. The Motley Fool has a disclosure policy.