NVIDIA Corporation

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NVIDIA Corporation stock analysis NVDA overview
Somewhat Bullish +50

Nvidia Reports Earnings This Month, and I'm Not Buying Shares. 1 AI Stock to Buy Now Instead.

📅 Nvidia is set to report its fiscal Q4 2027 results after market close on May 20, though the text mentions "Q1 2027" and dates like "May 2026", indicating a future-dated scenario.

🚀 Nvidia's shares are trading near record highs, up approximately 21% year to date as of late April/early May 2026.

💰 The company has guided for Q4 fiscal 2027 revenue of about $78 billion, implying roughly 75% year-over-year growth.

⚠️ Analysts hesitate to buy Nvidia ahead of earnings because customers are building proprietary AI chip alternatives.

📉 Nvidia's stock carries a high price-to-earnings ratio of around 46, leaving little room for margin compression or demand shifts.

📊 Nvidia's recent fiscal Q4 revenue hit a record $68.1 billion, up 73% year-over-year, with data center revenue at $62.3 billion.

🔌 Major customers like Google, OpenAI, and Meta are pivoting to non-Nvidia options via partnerships with Broadcom for custom TPUs and accelerators.

💡 The article recommends Amazon (NASDAQ: AMZN) as a more attractive AI chip investment due to its diversified business model and lower valuation.

📈 Amazon's custom chips business (Trainium, Graviton, Nitro) is growing at a triple-digit pace and has crossed a $20 billion annual revenue run rate.

💬 Amazon CEO Andy Jassy noted that if sold independently, Amazon's chip business could reach a $50 billion annual revenue run rate by late 2026.

🤝 OpenAI and Anthropic are committing gigawatts of compute capacity to Amazon's Trainium chips, indicating strong demand.

🏗️ Capital expenditures were $43.2 billion in Q1 2026, with a full-year target of approximately $200 billion for that fiscal year.

💶 Amazon trades at about 32 times earnings, which is a significant discount compared to Nvidia's valuation.

☁️ AWS revenue grew 28% year-over-year in Q1 2026 to $37.6 billion with an operating margin of 37.7%.

🏆 The Motley Fool Stock Advisor lists Amazon among its top AI stocks, while noting Nvidia is not included in their current "10 best" list for investors.

📜 The Stock Advisor team boasts a total average return of 991% against a 207% S&P 500 return as of May 13, 2026.

⚖️ Amazon offers a lower valuation than Nvidia while pairing cloud computing dominance with a rapidly growing custom silicon portfolio.

📢 The article concludes that for investors looking to allocate new money to AI chips today, Amazon appears the better long-term bet.

Bullish Signals
  • Nvidia's fiscal fourth-quarter revenue reached a record $68.1 billion, representing a 73% year-over-year increase.
  • Data center revenue alone surged to $62.3 billion, up 75% from the prior year, highlighting strong demand for AI infrastructure.
  • Networking revenue soared more than 3.5 times, demonstrating Nvidia's continued dominance in specialized hardware markets.
  • Demand for Nvidia's Blackwell architecture remains insatiable, with its hardware considered the default choice for cutting-edge AI training.
  • Amazon's custom silicon chip business has achieved a $20 billion annual revenue run rate and is growing at a triple-digit pace year over year.
  • Major model developers like OpenAI and Anthropic are committing gigawatts of capacity to Amazon's Trainium chips, validating the market for competitive AI solutions.
  • Trainium2 is largely sold out, while Trainium3 has begun shipping and much of Trainium4 has already been reserved.
  • Amazon Web Services (AWS) revenue grew 28% year over year to $37.6 billion in the first quarter, supported by a hefty 37.7% operating margin.
  • The Motley Fool Stock Advisor boasts a total average return of 991%, significantly outperforming the S&P 500's 207% over the same period.
  • Nvidia trades at a price-to-earnings ratio of about 46 as of this writing, while Amazon offers a meaningful discount at 32 times earnings.
Risk Factors
  • Nvidia shares sit near record highs but the stock's valuation already prices in years of uninterrupted dominance, with a price-to-earnings ratio of about 46 leaving little room for downside.
  • Major AI buyers are increasingly building or commissioning their own artificial intelligence chip alternatives, reducing dependence on Nvidia.
  • Competitors like Broadcom have secured long-term agreements to supply custom chips to key customers such as Alphabet (Google) through 2031 and Anthropic.
  • Amazon's Trainium business has already attracted commitments from major model developers including OpenAI and Anthropic for gigawatts of capacity.
  • Pricing power could soften as credible alternatives become more available, posing a risk to Nvidia's margins.
  • Even small shifts in the demand picture could weigh heavily on Nvidia's current high valuation.
  • Amazon trades at about 32 times earnings, a meaningful discount to Nvidia, suggesting investors may be reallocating from Nvidia to the cheaper alternative.
Full Analysis
Nvidia is set to report fiscal first-quarter 2027 earnings on May 20 after closing, with shares already up approximately 21% year to date and a revenue guide of about $78 billion implying roughly 75% year-over-year growth. Despite this expected strong performance, the author advises against buying Nvidia now due to rising customer competition and lofty valuation metrics like a price-to-earnings ratio near 46, which leaves little room for margin compression if demand shifts. Key customers including Alphabet, Anthropic, OpenAI, and Meta are increasingly developing or sourcing custom AI chips from rivals such as Broadcom and Amazon, reducing their reliance on Nvidia's dominance. Broadcom secured major long-term deals to supply Tensor Processing Units to Google through 2031 and is co-developing accelerators for OpenAI and Meta, signaling a competitive threat where pricing power could soften. Amazon emerges as the preferred alternative with its custom silicon business including Trainium, Graviton, and Nitro reported to have crossed a $20 billion annual revenue run rate in the first quarter of 2026, growing at a triple-digit pace. CEO Andy Jassy highlighted that if Amazon's chips were sold as a standalone entity like other leading chip companies, their annual revenue run rate would reach $50 billion, potentially ranking among the top three global data center chip businesses. Major model developers have committed significant gigawatts of capacity to Amazon's chips, with Trainium2 largely sold out, Trainium3 shipping early in 2026, and much of Trainium4 already reserved, while AWS revenue grew 28% year over year to $37.6 billion with operating margins at 37.7%. While capital expenditures were substantial at $43.2 billion in the first quarter with a full-year 2026 target near $200 billion, the author notes Amazon offers diversification beyond just chips and trades at around 32 times earnings, a significant discount to Nvidia that may provide more value given its accelerating growth potential. The article concludes by promoting Motley Fool Stock Advisor’s top 10 stock list for May 2026, which does not include Nvidia, citing historical outperformance examples from Netflix and Nvidia since past recommendations in December 2004 and April 2005 respectively, though Daniel Sparks and his clients have no position in the mentioned stocks while The Motley Fool holds positions in several of them including Alphabet, Amazon, Broadcom, Meta, and Nvidia.