Nvidia beat Wall Street estimates in its fiscal 2027 second quarter, with revenue up 106% and shares up 8% since the report. But history shows both Nvidia and the S&P 500 tend to post average losses in September, even as the chipmaker's long-term fundamentals stay strong.
Nvidia's blowout quarter meets a weak seasonal pattern
Nvidia reported revenue of $96.2 billion for its fiscal 2027 second quarter, a 106% year-over-year jump that beat Wall Street estimates. Diluted earnings per share soared 128% to $2.46 for the quarter, which ended July 26. Shares have climbed 8% since the announcement, as of August 28.
Yet history points to a rougher month ahead. Over the ten years from 2016 through 2025, the S&P 500 posted an average loss of 1.3% in September, and Nvidia tracked similarly, declining an average of 0.8% over the same period.
Inflation remains a problem for the economy, and there is still a chance the Federal Reserve raises the fed funds rate before the year ends, which could pressure equity performance if investors adopt a downbeat view of tighter monetary policy.
The five-year picture looks different
Nvidia shares have soared 901% over the past five years, and the company is now valued at $5.5 trillion. Analysts expect the top line to expand at a 58% yearly rate between fiscal 2026 and fiscal 2029, and the business posted a 62% net profit margin in the second quarter on the back of a supply-and-demand imbalance that has supported pricing power.
Despite that growth, Nvidia trades at a forward price-to-earnings ratio of 23.9, only a 14% premium to the S&P 500 index.
The AI spending risk
Fool analyst Neil Patel believes the chief risk facing Nvidia is the durability of the AI infrastructure build-out. On the fiscal 2027 second-quarter earnings call, Chief Financial Officer Colette Kress said the top five hyperscalers plan to spend $1.3 trillion on capital expenditures in 2027. If that spending boom slows sooner than expected, money flowing to AI labs, hyperscalers, and chipmakers could take a hit.
Source: The Motley Fool
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