Should You Buy Nvidia Stock Before June 24?

Written by Adria Cimino for The Motley Fool->

Nvidia sells the world’s most sought-after AI chips, those that fuel key tasks along every step of the AI path.

This has translated into explosive earnings growth and stock performance.

Nvidia (NASDAQ: NVDA) has proven itself to be an excellent investment in recent years -- it's soared 1,000% over the past five. The artificial intelligence (AI) chip giant has been among the first companies to monetize its AI investments in a big way. This is because Nvidia's chips are an essential tool for customers throughout their AI path -- from the training of models to the actual use of the technology to address real problems.

And this demand for chips has helped push Nvidia's earnings to record levels. For example, in the latest full year, revenue rose 65% to $215 billion. And net income climbed to $120 billion. Though rivals exist, customers flock to Nvidia because its chips -- known as graphics processing units (GPUs) -- offer the fastest speed around. Speed is an important advantage because it favors efficiency and allows a customer to bring its AI projects to commercialization sooner -- and both of these elements may reduce total costs over time.

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Nvidia stock clearly is a great stock to own, but now the question is: When should you actually make the purchase? Should you pick up the shares ahead of a potential catalyst on June 24? Let's find out.

First, we'll start by diving a little deeper into the Nvidia story. The company, as mentioned, has become an AI chip giant thanks to its top-performing GPUs. But Nvidia isn't just a chip player. These chips are part of entire systems, including a range of products and services -- from networking tools to enterprise software. Nvidia has even designed platforms that address problems and needs of specific industries: For example, the company offers pharmaceutical and biotech companies solutions for AI-assisted drug discovery.

And Nvidia has become a key partner for companies developing tomorrow's technology, from autonomous vehicles to humanoid robots and even next-generation telecom. All of this has broadened Nvidia's reach well beyond the GPU itself -- and secured its spot in the AI story as it develops and expands.

The latest major news is that Nvidia is now pursuing another enormous chip market: the central processing unit (CPU) market. CPUs are the chips that power all computers, and Intel and Advanced Micro Devices have been leaders in this area. These chips weren't a big part of the AI story in the early part of the AI boom -- but all of that is changing as agentic AI emerges. CPUs fuel AI agents, the software that considers a problem and takes action, or even several actions. Nvidia saw this coming, and this year is launching its first-ever stand-alone CPU for data centers and a superchip for personal computers, including its GPU and CPU.

All of this suggests plenty of good times ahead for Nvidia. So, now, with this in mind, let's consider what's set to unfold on June 24 at 9 a.m. Pacific Time. And that's the company's annual meeting of shareholders. It will be held virtually, allowing shareholders from any location to easily participate. A few items are on the agenda -- such as the election of 10 directors and approval of executive compensation -- but these aren't likely to be decisions that will impact stock performance.

Nvidia isn't known for making major announcements during these meetings, and it's important to keep in mind that the company recently reported earnings, so any such news would have been given at that time. But chief Jensen Huang may offer a few comments about Nvidia's position in the AI market or comment on the future trajectory of AI. And any such comments could offer the stock direction in the hours or days to follow.

Now, let's get back to our question: Should you buy Nvidia stock before this meeting? I consider Nvidia a buy today, due to the strengths I mentioned above and its dirt cheap valuation -- it trades at 22x forward earnings estimates. But you don't have to rush to get into the stock before June 24, and here's why.

As a long-term investor, you'll aim to hold onto Nvidia stock for at least five years. And any price movement around the shareholders' meeting is unlikely to change your returns when you hold on for that long. All of this means that, yes, Nvidia is a buy -- right now or after June 24.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and 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.

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