More than 30 years ago, the advent and proliferation of the internet changed the world forever. It provided businesses with new pathways to market and sell to customers, and paved the way for the retail investor revolution by breaking down information barriers that had existed between Wall Street and Main Street for over a century.
Investors have been waiting a long time for the next breakthrough technology, and artificial intelligence (AI) has answered the call. Empowering software and systems with the tools to make autonomous, split-second decisions is a multitrillion-dollar addressable opportunity — and that’s all thanks to Nvidia’s (NASDAQ: NVDA) hardware.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
But while Nvidia’s graphics processing units (GPUs) are dominating in AI-accelerated data centers, history suggests a day of reckoning is approaching for its stock.
Image source: Nvidia.
The face of the AI revolution will lift the hood on its 2027 fiscal first-quarter operating results after the closing bell on May 20. Based on the outlook provided by the company and its CEO, Jensen Huang, it should be another stellar quarter.
When Nvidia reported its fiscal fourth-quarter results in late February, it guided for $78 billion in first-quarter sales (plus or minus 2%) and a generally accepted accounting principles (GAAP) gross margin of 74.9%. This implies 77% sales growth from the comparable quarter last year and significant GAAP gross margin improvement.
NVDA Gross Profit Margin (Quarterly) data by YCharts.
Although external competition is ramping up, Nvidia’s GPUs hold well-defined competitive advantages on a compute basis. None of its direct rivals have come close to matching the capabilities of its infrastructure, which, when paired with persistent GPU scarcity, has enabled Nvidia to charge a premium for its hardware.
Huang has also made clear that his company’s Blackwell and Vera Rubin architectures are on track to collectively total $1 trillion in lifetime sales by the end of 2027. Demand for AI infrastructure is overwhelming supply, and Nvidia’s GPUs are the undisputed top choice in enterprise data centers.
Image source: Getty Images.
Although Nvidia has made a habit of exceeding the consensus quarterly revenue and profit forecasts of Wall Street analysts, the reaction of the company’s stock following earnings releases suggests that investors’ expectations for Nvidia, and perhaps AI in general, are too lofty.
Story Continues
Here’s how Nvidia’s shares have performed the day after it releases its quarterly operating results:
Q4 2026: (5.5%)
Q3 2026: (3.2%)
Q2 2026: (0.8%)
Q1 2026: 3.2%
Q4 2025: (8.5%)
Q3 2025: 0.5%
Q2 2025: (6.4%)
While it’s not uncommon for Nvidia’s shares to pop in after-hours on the day of its release, shares have declined from their prior-day close following five of the last seven quarterly earnings releases. On average, Nvidia loses 3% of its value after unveiling its operating results.
Since the advent of the internet, every game-changing technology for more than 30 years has navigated an early innings bubble-bursting event. These bubbles form because investors overestimate the adoption and/or optimization of innovations.
Though Nvidia’s operating results clearly show there isn’t an AI infrastructure adoption issue, businesses aren’t particularly close to optimizing their AI solutions or generating a positive return on their AI investments.
Based solely on what history tells us, May 21 could be a terrible day for Nvidia and its shareholders.
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $524,786!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,236,406!*
Now, it’s worth noting Stock Advisor’s total average return is 994% — a market-crushing outperformance compared to 199% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of April 20, 2026.
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.
May 21 Could Be a Terrible Day for AI Titan Nvidia, Based on What History Tells Us was originally published by The Motley Fool