Why May Could Be a Make-or-Break Month for Nvidia Stock

Key Points

• Nvidia produced nearly $100 billion in free cash flow last year.

• The company is putting that cash to work to maintain its phenomenal growth.

• Nvidia is due for its next earnings update on May 20.

Some market watchers may think the luster is off Nvidia (NASDAQ: NVDA) stock. At first glance, that looks to be true. Shares are down and trailing the market this year, and there doesn’t seem to be a catalyst in sight.

All the good news looks to be in the stock price, with artificial intelligence (AI) infrastructure spending plans seemingly having nowhere to go but down. That could be a false narrative, though. Here’s why investors will soon find out if the stock’s gains are in the past or shares are about to take the next leg higher.

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Investor fatigue

Nvidia’s business has been growing so fast and at such a high level that investors now seem to expect amazing results. What they shouldn’t get complacent about, however, is the disconnect between the underlying business growth and the stock price’s stagnation.

Revenue and net income grew 65% last year, and the company generated nearly $100 billion in free cash flow. Nvidia is using some of that cash for a series of strategic investments to strengthen its AI ecosystem. A string of $2 billion investments has recently been announced. They include tech company Marvell Technology to enhance the development of custom AI chips, Nebius Group for AI cloud infrastructure, and Coherent and Lumentum for AI data center networking technologies.

Mark your calendar

Nvidia is, of course, still investing in its own business as well. New products such as the Vera Rubin architecture, designed for agentic AI, are in high demand. Nvidia sees that helping fiscal 2027 first-quarter sales rise another astounding 77% year over year.

That quarterly report is due May 20 and could wake investors, delivering the next major catalyst for the share price to move higher. Before that report, tech bellwether Microsoft will provide its own update around the beginning of May. If Microsoft and other large tech companies continue to spend heavily on AI, Nvidia will be one of the biggest beneficiaries.

I expect that’s the outlook CEO Jensen Huang will present to investors with the May 20 release. If revenue numbers continue to grow, institutional investors will have no choice but to keep participating in the growth story. Retail investors will follow as Nvidia’s valuation metrics will present an even more compelling investment case.

General market conditions may push Nvidia stock into positive territory for the year before then, but a positive update from the company will likely push it even higher. Investors would do well to own shares before that upcoming catalyst.

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Howard Smith has positions in Microsoft and Nvidia and has the following options: short April 2026 $180 calls on Nvidia. The Motley Fool has positions in and recommends Coherent, Lumentum, Marvell Technology, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.