Nvidia Corporation [NASDAQ: NVDA] is set to report its fiscal first-quarter results after the closing bell on May 20, in what is shaping up to be the most consequential earnings event of the quarter.

All indicators point to Nvidia delivering another round of jaw-dropping sales and profit growth, but AI software company Palantir Technologies [NASDAQ: PLTR] just demonstrated why that may not be enough.

Palantir reported first-quarter revenue surging 85% to $1.63 billion, driven by 84% growth in US government revenue and a more-than-doubling in US commercial sales, while CEO Alex Karp raised full-year sales guidance from 61% growth to 71%.

Despite those blowout results, Palantir shares fell more than 8% in the two days following the report, as investors concluded that the company’s sky-high valuation left no room for even exceptional outperformance.

Palantir entered 2026 trading at a price-to-sales ratio above 100 and still carries a P/S ratio north of 60, well inside what analysts describe as historical bubble territory.

Historical data shows that every industry leader at the forefront of a game-changing technology has eventually failed to sustain a P/S ratio above 30, and no amount of raised guidance has managed to pull Palantir out of that zone.

Nvidia faces a comparable dynamic, with its GPU dominance and CUDA software ecosystem locking in customers and driving extraordinary growth, but its valuation embedding expectations that may be impossible to exceed.

Every transformative technology over the past three decades has gone through an early-stage bubble-bursting event, triggered by investors overestimating how quickly businesses would optimise their returns from the new infrastructure.

Nvidia is also contending with growing internal competition, as several of its largest customers are developing their own AI chips for their data centres, creating cheaper alternatives that could gradually erode Nvidia’s pricing power and gross margins.

Even if Nvidia delivers a strong beat on May 20, history suggests May 21 could be a rough day for shareholders, with lofty expectations already priced into the stock leaving little room for the kind of upside surprise that would drive further gains.