C.J. Muse from Cantor Fitzgerald expects Nvidia’s upcoming guidance to be better than feared, driven by supply chain improvements and strong data center demand, despite concerns over US-China tensions and revenue losses. He remains bullish on Nvidia, believing the company’s growth prospects in AI and data centers will lead to outperformance, even if there are modest earnings misses.
The video discusses the recent performance and outlook for Nvidia, highlighting its strong market position and upcoming earnings report. Nvidia’s shares are up nearly 3% ahead of the earnings release, driven by positive supply chain developments and anticipation of robust guidance. Analyst C.J. Muse from Cantor Fitzgerald maintains a bullish stance with a $200 target price, expecting the company’s guidance for the upcoming quarter to surpass fears and indicate strong growth, especially in data center demand.
Muse attributes Nvidia’s optimistic outlook to improved execution in the supply chain, particularly for the Blackwell product cycle set to ramp up in July. He notes that recent acceleration in Asia-based supply chains boosts confidence that Nvidia will meet or exceed its revenue guidance, which is expected to be around $45 billion or higher. He emphasizes that any guidance above $45 billion would be well-received and could signal sequential growth, especially in the second half of the year, driven by data center expansion and AI demand.
A significant concern discussed is the impact of US-China tensions, specifically the H20 embargo, which has resulted in a loss of approximately $15 billion in Chinese data center revenue for Nvidia. Muse expects Nvidia to refrain from pre-announcing detailed guidance on this issue before discussions with US authorities, but he anticipates the company will acknowledge the negative effects and the broader strategic challenge posed by increased Chinese competition. Despite this, he believes Nvidia’s core growth prospects remain strong, especially outside China.
The analyst also addresses the difficulty in predicting Nvidia’s upcoming earnings due to the China-related revenue loss. He points out that if the revenue shortfall is around $8-9 billion instead of the $15 billion estimated, the company’s performance could be better than feared. Muse remains confident that Nvidia’s supply chain is improving, China risks are being managed, and the second half of the year will likely see a significant ramp-up in growth. He suggests that even a modest miss would not significantly impact the stock, which has already turned positive for the year.
In conclusion, Muse sees Nvidia as a highly favorable investment in the semiconductor sector, especially given the growth potential driven by AI and data center demand. He believes the risk-reward profile favors being long on Nvidia, with the stock poised to outperform other semiconductor stocks over the next few months. Despite geopolitical uncertainties, he expects Nvidia to deliver strong earnings momentum and maintain its leadership position in the AI-driven market, making it a top pick in the current environment.