Nvidia (NVDA 0.48%) stock has been enjoying a solid few weeks after being relatively dormant for about six months. However, I think there's a catalyst on the horizon that could send it skyrocketing. On May 20, the company will announce its fiscal 2027 first-quarter results. These reports have become a spectator event for shareholders and non-shareholders alike.
The leading GPU designer is one of my highest-conviction stocks, and I think it will deliver results that blow away expectations.
Image source: Getty Images.
Management is guiding for monster growth
In conjunction with its fiscal Q4 results, management guided for 77% revenue growth during the current fiscal quarter. Regardless of whether a company is a $1 billion small cap or a $5 trillion behemoth, that would be an impressive growth rate. Considering Nvidia's size, this level of growth is unheard of, and it showcases the demand for its cutting-edge data center processors. Demand for artificial intelligence (AI) computing has never been higher, and it appears that it's only going to continue rising.
NVDA Revenue (Quarterly YoY Growth) data by YCharts.
There are a host of estimates for what AI infrastructure spending will look like over the next few years, but all of them trend in the same direction: upward. Nvidia management believes global data center capital expenditures will reach $3 trillion to $4 trillion by 2030. The consultants at McKinsey & Company estimate that cumulative data center spending through 2030 will reach $7 trillion, but that estimate may be getting a bit old since it was made last year. Regardless, there's still a ton of AI spending coming down the pipeline, and few companies are better positioned to capture a piece of it than Nvidia.
For the fiscal quarter that ends this week, management may estimate 77% growth, but Wall Street is well aware that Nvidia tends to outperform guidance by a few percentage points. The average analyst projects 79% revenue growth for Q1. So a beat is already expected.
NASDAQ: NVDA
Key Data Points
As a result, Nvidia likely would need to deliver revenue growth in the 80% range or greater for its stock to see a real post-earnings pop. But if AI spending trends continue to be heavy, I have no doubt that it will be a top stock to own. So even if it doesn't skyrocket immediately after earnings, the outlook is still bright enough to warrant buying Nvidia shares and holding them for the foreseeable future.
