Nvidia shares are under pressure ahead of the company’s fiscal second-quarter 2027 results on Wednesday, but one analyst argues investors may be viewing the artificial intelligence leader through the wrong lens.
The stock fell about 2.5% Monday and was on track for its seventh consecutive losing session, potentially its longest losing streak since September 2022, according to Dow Jones Market Data.
Despite the recent weakness, Nvidia has gained about 12% this year.
That performance looks modest compared with the 59% advance in the PHLX Semiconductor Index over the same period.
Cantor Fitzgerald analyst CJ Muse believes the disconnect creates an opportunity.
“It is time to close your eyes” and bet big on Nvidia’s stock, Muse wrote in a Monday note to clients.
He said once momentum returns, the stock is expected to move rapidly.
“When this stock starts moving, we think it is going to move very, very fast,” he said.
Bullish earnings estimates make valuation look cheaper
Muse’s bullish case rests partly on Nvidia’s potential earnings growth.
He pointed to estimates of $17 in earnings per share for calendar 2027 and $25 for calendar 2028.
Based on those projections, Nvidia is trading at roughly 14 times the 2027 estimate and 10 times the 2028 figure.
Muse has a $350 price target on Nvidia, about 67% above current levels.
The analyst believes investors are currently “underweight” Nvidia, suggesting the stock is less represented in portfolios than its broader market position might warrant.
The argument is not simply that Nvidia will continue selling more GPUs.
Instead, Muse believes the company is becoming increasingly embedded in the financing and infrastructure that supports the AI ecosystem.
Nvidia’s controversial financial strategy could become an advantage
Nvidia’s growing use of what Muse describes as “financial engineering” has attracted criticism, particularly because the company has taken equity stakes in AI companies including OpenAI and Anthropic and entered revenue-sharing arrangements with neocloud providers such as CoreWeave and Nebius.
Muse, however, sees those arrangements as increasingly important to Nvidia’s competitive position.
“This strategy is becoming increasingly critical and one that we believe will shine as we move further through today’s robust AI infrastructure buildout,” he said.
The logic is that Nvidia is not simply supplying chips to customers.
By helping finance AI infrastructure, providing computing capacity and participating financially in the companies building that infrastructure, it can create deeper relationships that are harder for competitors to disrupt.
Muse argues that Nvidia’s equity investments, revenue-sharing agreements and plans to help raise as much as $500 billion for AI infrastructure are effectively turning its GPUs “into a financeable, increasingly fungible asset class.”
That could make it harder for customers to replace Nvidia hardware with competing chips.
Five potential catalysts could revive the stock
Cantor Fitzgerald identified five potential catalysts that could change the market’s perception of Nvidia.
One is greater clarity around data-center revenue in 2027.
Other companies have begun providing specific targets for their future infrastructure spending, while Nvidia has yet to offer comparable visibility.
Another potential catalyst is additional information from Anthropic ahead of its expected fourth-quarter 2026 IPO.
Investors have recently focused on concerns surrounding the AI company’s July annual recurring revenue.
The firm also sees greater visibility into hyperscaler capital expenditure plans for 2027 and 2028 as potentially supportive for Nvidia.
Sustained growth among neocloud providers is another factor, particularly if Nvidia continues using financing and revenue-sharing arrangements to support data-center expansion.
Finally, Muse believes GPUs could increasingly become standardized as a new asset class through financing agreements, potentially broadening Nvidia’s role beyond traditional semiconductor sales.
Custom chips remain a risk, but Nvidia is broadening its moat
The biggest challenge to Nvidia’s dominance is increasingly coming from the company’s largest customers.
Major cloud companies are developing custom AI accelerators to reduce their dependence on Nvidia, raising concerns that the chipmaker’s market share could eventually decline.
Muse believes its neocloud strategy offers some protection against that risk.
Revenue-sharing agreements with neocloud companies could prove “much more resilient” because Nvidia is helping enable data-center deployments beyond the largest hyperscalers.
The company is also expanding its customer base among enterprises and sovereign AI programs while moving toward selling complete AI systems that include racks, networking and other components.
That broader strategy could make Nvidia less vulnerable to losing a particular chip program to a competitor.
Wall Street remains bullish ahead of results
Other analysts are also maintaining positive views ahead of Nvidia’s earnings.
Rosenblatt Securities has retained a Buy rating and expects Nvidia’s revenue and earnings to exceed consensus estimates.
Benchmark has likewise reiterated its Buy rating and set a $335 price target.
The firm expects Nvidia to report revenue of about $92 billion and earnings per share of $2.10.
The earnings report will therefore provide an important test of whether Nvidia’s fundamental growth can overcome concerns about valuation, custom-chip competition and the sustainability of AI infrastructure spending.
For Muse, however, the bigger opportunity lies in recognizing that Nvidia’s competitive advantage may no longer be limited to its semiconductor technology.
Its financing relationships, software ecosystem, infrastructure partnerships and stakes in AI companies could create a network around Nvidia that is increasingly difficult to displace.
That strategy remains controversial. But if AI infrastructure spending continues accelerating, the same financial moves that investors have questioned could ultimately help Nvidia retain its position at the center of the AI boom.
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