NVIDIA’s stock has experienced a rather underwhelming performance this year, rising by only about 3.5% despite expectations of a more significant increase. Conventional wisdom suggested that the stock would gain momentum, especially with most bearish catalysts seemingly neutralized. 
However, analysts are now raising questions about what could be holding the stock back.
One key factor is the impact of U.S. licensing restrictions on NVIDIA’s China business, which forced the company to completely write off its China-origin Total Addressable Market (TAM) for its H20 GPU. Instead of factoring any residual sales from China into its guidance, NVIDIA has decided to treat them as a bonus. Despite this, NVIDIA’s prospects remain strong. According to UBS, the company has visibility into a staggering $1.5 trillion in data center revenue. This aligns with NVIDIA’s own statement that it has access to vast AI infrastructure projects, potentially contributing tens of gigawatts of demand for AI capabilities.
UBS’s hypothetical projection suggests that NVIDIA could generate as much as $400 billion annually in revenue from its AI data center segment alone, with the realization timeline set for 2-3 years. This makes the situation even more intriguing, as Mizuho analyst Jordan Klein notes that hedge funds in Boston are “super bullish” on NVIDIA, but they are perplexed by the stock’s failure to break out despite all the positive news. Klein points out that long-only funds and mutual funds are likely waiting for a catalyst-a significant earnings beat or a guidance raise in August-to push them to act.
In short, while NVIDIA’s future looks promising, some investors are biding their time, waiting for that final trigger to send the stock soaring.
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Waiting for that August earnings call to pop off. Let’s goooooo! 🚀