December has historically been a challenging month for Nvidia Corp.
Historical data reveals that while Nvidia often delivers positive third-quarter earnings, December tends to be a negative month for its stock.
December Is Nvidia's Toughest Month In The Last Decade
Seasonal analysis over the past decade clearly shows that December is statistically the weakest month for Nvidia's stock.
On average, Nvidia shares have fallen 1.84% in December, the largest decline in all months.
Only four of the past ten years, or 40% of the time, has Nvidia closed December in positive territory.
The most dramatic December decline occurred in 2022, when shares dropped 13.64%.
Conversely, Nvidia's best December performance was in 2016, with a remarkable 15.77% gain. While the December struggles are notable, they are temporary, as Nvidia typically rebounds strongly in the first quarter of the following year.
From January to March, Nvidia's stock posts average gains of 5.5%, 9.5%, and 6.0%, respectively, with May standing out as the strongest month, boasting an average return of 13.91%.
Nvidia's December Struggles Are Not Earnings-Driven
At first glance, traders might assume that Nvidia's December challenges stem from negative market reactions to its third-quarter earnings, which are typically released in mid-November.
However, historical data disproves this theory.
Nvidia's one-day performance following third-quarter earnings has been broadly positive over the last decade, with shares gaining an average of 2.57% in the session immediately after the report.
For instance, Nvidia shares surged 29.81% after third-quarter earnings in 2016 and gained 13.86% in 2015. While there have been isolated post-earnings declines-such as an 18.76% plunge in 2018-most one-day reactions have been positive, suggesting that Nvidia's December woes are not directly tied to earnings.
YearQ3 Earnings Date1-Day Reaction
- 2023Nov. 21-2.46%
- 2022Nov. 16-4.54%
- 2021Nov. 178.25%
- 2020Nov. 180.09%
- 2019Nov. 14-2.67%
- 2018Nov. 15-18.76%
- 2017Nov. 95.27%
- 2016Nov. 1029.81%
- 2015Nov. 513.86%
- 2014Nov. 6-2.13%
The persistent December weakness appears to be a product of profit-taking behavior rather than disappointing earnings. Nvidia has historically delivered stellar year-to-date returns, often enticing investors to lock in gains before year-end.
Over the past decade, an investor who purchased $100 of Nvidia stock on Jan. 1 would, on average, have seen their investment grow to $188 by the end of November, representing an 88% return in the first 11 months of the year.
Such robust performance likely prompts many investors to sell shares in December to secure profits, leading to downward pressure on Nvidia's stock.
The trend of profit-taking is particularly understandable in years like 2023, when Nvidia became a poster child of the artificial intelligence (AI) boom. By November, shares had already rallied by more than 240%, fueled by unprecedented demand for GPUs powering AI applications.
In such cases, the risk of holding Nvidia into December outweighs the potential reward, driving many investors to reduce their positions.
