Key Points
Nvidia (NASDAQ: NVDA) remains the leader in the artificial intelligence (AI) industry thanks to its market-leading advanced chips that are ideal for training AI models, as well as its CUDA software platform that unlocks the power of its chips and makes it hard for competitors to lure developers away, which has given Nvidia a competitive advantage that is hard to match.
However, the stock has lagged broader equities this year as some investors are increasingly convinced that the AI bubble will eventually burst. And on top of that, geopolitical tensions have rocked markets, prompting investors to rotate into safer, less volatile companies. Despite Nvidia’s perceived challenges, the stock is arguably a buy ahead of its first-quarter fiscal year 2027 results due May 20.
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One number to look at
For its Q1 2027, Nvidia expects revenue of $78 billion at the midpoint, representing a year-over-year increase of about 77%. The market is likely to shrug if Nvidia matches its guidance. By now, everyone is used to top-line growth in this range for the tech giant. However, one important number to watch will be the company’s guidance for the second quarter of fiscal year 2027. Here is why.
Nvidia is finally set to resume selling its H200 chips in China, after significant regulatory pressure from both the Chinese and U.S. governments last year that disrupted its business and eroded its market share in the country. Nvidia still maintains a 55% share of the Chinese market — according to some estimates — which is impressive given the restrictions it faced there.
Now that things are improving on that front, the company could generate meaningful revenue from China. The first sign might be in the Q2 2027 guidance it gives investors in its next earnings release.
Beyond its Q2 guidance, it will also be important to monitor the company’s outlook for the rest of the year. Nvidia is set to release its next-gen AI Chip, Vera Rubin, in the second half of 2026. The company recently projected $1 trillion in sales from Vera Rubin and Blackwell through 2027. In my view, the market has yet to fully price that into the share price. The stock barely moved following that forecast.
That’s likely partly due to a rotation out of tech stocks, given recent geopolitical challenges. But as things seem to be easing on that front, Nvidia’s shares could soar, provided management confirms that demand for these AI chips is indeed trending in that direction and could even exceed the $1 trillion projection in the company’s next quarterly update. What does all this mean for investors?
Now may be a great time to buy the stock on the dip. And even if Nvidia’s shares do not jump on May 20, the company’s dominance in AI as a new phase of the industry gets underway makes its long-term prospects very attractive.
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Prosper Junior Bakiny has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
