A top tech investor flags 2 reasons Wall Street is underestimating Nvidia as it heads toward earnings

Gene Munster of Deepwater Asset Management maintains a bullish outlook on Nvidia ahead of its highly anticipated earnings report, asserting that Wall Street is underestimating the chip giant's continued growth in the AI sector. Munster projects the AI boom for Nvidia to persist for at least two more years, citing CEO Jensen Huang's optimistic platform updates and revenue targets which suggest over 10% upside through CY26, potentially increasing CY26 revenue forecasts from 39% to 45%. Despite some analyst caution regarding supply and the recent Softbank stake divestment, Munster believes Nvidia's unchallenged market position in the early stages of AI buildout will drive higher-than-expected growth, contrasting with current Wall Street revenue growth expectations for 2025-2027.

Analysis

Gene Munster of Deepwater Asset Management maintains a strong bullish outlook on Nvidia (NVDA) ahead of its highly anticipated earnings report, asserting that Wall Street is underestimating the chip giant's continued growth in the AI sector. He projects the AI boom for Nvidia to persist for at least two more years, contrasting with some market worries about potential deceleration.

Munster's optimism is rooted in CEO Jensen Huang's recent statements from the Nvidia Global Technology Conference, which included optimistic platform updates and future revenue forecasts. He anticipates over 10% upside through CY26 based on Huang's Blackwell and Rubin revenue targets, expecting CY26 revenue forecasts to increase from the current 39% to 45%. This compares to current Wall Street expectations of 59% revenue growth in 2025, 39% in 2026, and 22% in 2027.

Despite some analyst caution regarding supply uncertainties and the recent Softbank stake divestment, Munster remains unfazed, emphasizing Nvidia's unchallenged market position in the early stages of AI buildout. He highlights a "Catch-22" where both weak and excessively strong guidance could be misinterpreted by investors. Munster believes Nvidia's growth will exceed investor expectations over the next few years.

Key Decisions for Investors

• Closely scrutinize Nvidia's upcoming earnings report, focusing on management's guidance and supply chain commentary, given the divergence between Gene Munster's bullish outlook and broader Wall Street estimates.
• Monitor for potential upward revisions to CY26 revenue forecasts, which Munster expects to increase from 39% to 45% based on CEO Jensen Huang's optimistic projections.
• Evaluate the long-term implications of Nvidia's perceived unchallenged market position in the AI buildout, while preparing for potential market volatility stemming from the "Catch-22" nature of guidance interpretation.