Boston Hedge Funds Question: What’s Preventing NVIDIA Shares from Upside Breakout?

This content does not constitute investment advice. The author does not hold any positions in the stocks mentioned.

Current Status of NVIDIA Shares

Traditionally, one might expect NVIDIA’s stock to be gaining momentum as it approaches its upcoming earnings announcement in August. However, despite the resolution of many short-term bearish factors, the stock has registered a modest increase of only approximately 3.5 percent year-to-date. One industry analyst has speculated on several underlying dynamics that could be contributing to this restrained investor interest.

Shifts in Market Focus

In a strategic pivot, NVIDIA has essentially dismissed its China-based total addressable market (TAM) due to new U. S.licensing requirements affecting its H20 GPU. The company has opted to regard any remaining sales in China as unexpected gains, rather than incorporating them into their financial forecasts.

Promising Revenue Forecasts

Nonetheless, NVIDIA appears poised for significant success. A recent analysis by UBS highlights that the company has access to a staggering $1.5 trillion of potential data center revenue. This aligns with NVIDIA’s assertion during its Q1’26 earnings call, where it mentioned having insight into “tens of gigawatts”of AI infrastructure projects.

Strategic Insights from UBS

UBS conducted a theoretical assessment that considers a hypothetical order pipeline of 20 gigawatts. The firm estimates that NVIDIA stands to gain between $40 billion and $50 billion for every gigawatt of AI infrastructure. Assuming these projects come to fruition within a 2- to 3-year timeframe, the potential revenue for NVIDIA’s data center segment could approach $400 billion annually.

Analyst Perspectives on Future Performance

The focal point of the conversation arises from Mizuho analyst Jordan Klein, who recently shared insights following discussions with clients—leaving him with an “even more bullish”outlook on NVIDIA. He particularly highlighted the stock’s positioning as it gears up for the upcoming earnings report.

Klein noted that hedge funds in Boston are exhibiting a distinctly positive sentiment towards NVIDIA, pondering the factors that are preventing the stock from experiencing a breakout, despite a slew of favorable news lately.

Potential Catalysts Ahead

According to Klein, some long-only funds and mutual funds appear to be biding their time, anticipating a strong bullish indicator in the form of an earnings surprise coupled with an upward revision in guidance. The Mizuho analyst foresees that such a catalyst may materialize in August, prompting sidelined institutions to begin actively pursuing NVIDIA shares.

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