Gene Munster Warns Nvidia Faces 'Catch-22' Ahead Of Earnings, But Remains Bullish: 'I Remain Positive On Shares' - NVIDIA (NASDAQ:NVDA)

Core Viewpoint - Nvidia Corp.'s growth story is considered intact despite potential short-term risks, with expectations of sustained growth over the next two years [2][5]. Group 1: Earnings Guidance and Market Reactions - Gene Munster from Deepwater Asset Management highlights a "Catch-22" scenario for Nvidia's upcoming earnings report, where strong guidance may raise concerns about overspending, while modest guidance could indicate faster normalization of growth [3][4]. - Nvidia's CEO Jensen Huang indicated that demand for Nvidia's Blackwell and Rubin chips could reach $500 billion by the end of 2026, suggesting at least a 10% upside to current Wall Street estimates [3][4]. - Current Wall Street estimates have increased by 4%, but there remains approximately 10% potential upside, with revenue growth forecasts for 2026 expected to rise from 39% to about 45% as models adjust to Nvidia's expanding AI pipeline [4]. Group 2: Investor Sentiment and Long-term Outlook - Investor sentiment has cooled due to SoftBank's exit from Nvidia and concerns over AI overinvestment, particularly after Meta's warning about rising expenses [5]. - Despite short-term concerns, the long-term outlook for AI remains positive, with expectations that profitable AI applications will emerge, enhancing investor confidence and benefiting Nvidia and other AI infrastructure stocks [6]. Group 3: Analyst Ratings and Financial Projections - Bank of America Securities analyst Vivek Arya has reaffirmed a Buy rating on Nvidia, citing strong visibility in its data center operations [7]. - Arya projects that Nvidia could achieve 50% revenue growth and a 70% increase in earnings per share by 2026, while trading at a modest 24 times forward earnings [8].