Analyst Recommends Increasing Nvidia Holdings
Cantor Fitzgerald analyst C.J. Muse expressed an optimistic view on Nvidia’s stock in a recent client note, arguing that the market is undervaluing the company’s AI strategy. While acknowledging a lack of immediate catalysts, Muse suggests that once momentum builds, the stock’s rise could be swift and substantial. He urges investors to “keep a close eye and take bold positions” in Nvidia shares.
Muse’s valuation is grounded in ambitious earnings per share (EPS) projections of $17 for 2027 and $25 for 2028. Based on these estimates, the stock currently trades at a forward price-to-earnings ratio of approximately 14 for 2027 and 10 for 2028, implying the shares remain reasonably priced. He further notes that Nvidia’s weighting in many portfolios is significantly below its representation in large-cap indices, indicating room for increased allocation.
Nvidia’s Expanding Role Beyond Chip Manufacturing
Muse highlights that Nvidia has evolved beyond a traditional chipmaker by strategically investing equity in AI-focused companies like OpenAI and Anthropic. Additionally, it has entered revenue-sharing agreements with emerging cloud providers such as CoreWeave and Nebius Group. This financial engineering approach represents a novel path for growth that remains underappreciated by the market.
These partnerships underpin Nvidia’s ambition to become a cornerstone of AI infrastructure development. Faced with major cloud providers advancing their own chip designs, Nvidia is enhancing its resilience by collaborating with diverse new cloud players, broadening its client base to encompass enterprises and government projects alike. The revenue-sharing deals also signal Nvidia’s shift toward offering comprehensive AI system solutions, integrating racks, networking, and auxiliary hardware components.
Innovative Financing Strengthens Industry Position
Muse emphasizes Nvidia’s leveraging of innovative funding mechanisms, including committing $500 million alongside financial institutions to invest in AI infrastructure. The company also exchanges GPU computing power for equity stakes in AI startups, effectively transforming its GPU resources into a financeable, liquid asset class. This strategy helps Nvidia maintain a competitive moat, since many cloud infrastructure providers depend fundamentally on Nvidia’s capital and software support, making outright replacement challenging even if competitors surpass certain technical aspects.
Stock Performance and Pricing Developments
Nvidia’s shares recently experienced a seven-day losing streak, the longest since September 2022, closing last Monday down roughly 12% year-to-date—significantly underperforming the PHLX Semiconductor Index, which surged 59% over the same period. Reports indicate that starting in 2027, corporate customers may see price increases exceeding 15% on Nvidia AI chip servers, with adjustments depending on chip type and memory specifications.
Additionally, Nvidia is reportedly investing $6 billion in partnership with AI startup Poolside to develop open-weight AI models tailored for the U.S. market, aiming to compete with Chinese firms DeepSeek and Moonshot AI. The company has yet to comment on these plans.
Upcoming Earnings and Market Focus
Nvidia is scheduled to report fiscal 2026 second-quarter results after market close on Wednesday. Investors and analysts will closely examine revenue mix changes, AI-related business performance, and forward guidance. The earnings report is expected to provide deeper insights into the execution of Nvidia’s AI strategy and its potential impact on future share performance.