Gene Munster Warns Nvidia Faces 'Catch-22' Ahead Of Earnings, But Remains Bullish: 'I Remain Positive On Shares'

Gene Munster says Nvidia Corp.'s (NASDAQ:NVDA) growth story remains intact despite short-term risks as investors brace for a "Catch-22" scenario around next week's earnings.

Nvidia's Guidance Could Backfire Either Way

On Wednesday, ahead of Nvidia's earnings next week, Deepwater Asset Management's Gene Munster said that he believes the AI giant faces a "Catch-22" that could unsettle investors no matter how strong the results are.

"I remain positive on shares of NVDA and believe over the next two years growth will be higher for longer," Munster said in his latest note with Brian Baker.

However, he warned that the setup around next week's report could spark volatility, as "stronger guidance can amplify worries about overspending, while a modest raise can be read as the first sign that growth is normalizing faster than expected."

$500 Billion In Demand — But Analysts Still Catching Up

Munster pointed to Nvidia CEO Jensen Huang's comments at the company's GTC event in Washington, D.C., on Oct. 28, where he revealed demand for Nvidia's Blackwell and Rubin chips could reach $500 billion through the end of 2026.

That outlook, Munster said, implies at least 10% upside to current Wall Street estimates.

"Street numbers have risen by 4%, which means there is around 10% left on the table," he noted, adding that analysts remain cautious due to ongoing supply constraints and uneven estimate revisions.

Despite these concerns, Munster expects revenue growth forecasts for calendar year 2026 to rise from 39% to about 45%, as consensus models adjust to Nvidia's expanding AI pipeline.

Investors Are Nervous, But The Bigger Picture Remains Bright

Munster acknowledged that investor sentiment has cooled after SoftBank Group's (OTC:SFTBF) (OTC:SFTBY) exit from its Nvidia position and amid growing concerns of AI overinvestment, especially following Meta's warning that expenses will rise faster than revenue next year.

Still, Munster highlighted the long-term opportunity: "The use cases for AI, its utility, and ultimately the case for monetization will emerge because intelligence at scale is valuable."

He added that as more profitable AI applications appear, "the AI trade flywheel will quicken," boosting investor confidence and potentially lifting Nvidia and other AI infrastructure stocks over the next several years.

Bank Of America Analyst Calls Nvidia ‘Particularly Compelling'

Meanwhile, Bank of America Securities analyst Vivek Arya has reaffirmed his Buy ratings on leading data center and semiconductor equipment stocks, highlighting Nvidia as "particularly compelling" due to the company's strong visibility in its data center operations.

Arya noted that, based on Nvidia's current order pipeline, the chipmaker could post 50% revenue growth and a 70% jump in earnings per share in 2026, all while trading at a comparatively modest 24 times forward earnings.

Nvidia dipped 0.94% to $191.98 in after-hours trading, according to Benzinga Pro. Benzinga's Edge Stock Rankings place the chipmaker in the 98th percentile for Growth and 93rd for Quality, highlighting its strong performance relative to industry peers.