Hedge Fund Manager Predicts ‘3 Key Takeaways’ Ahead of Nvidia’s Q1 Results

Gene Munster, Managing Partner at Deepwater Asset Management, highlighted three key takeaways that investors should expect from Nvidia’s (NVDA) results for the April quarter and its guidance for the June quarter. Munster particularly highlighted the impact of the recent H20 chip curbs and the potential for artificial intelligence (AI) buildout on Nvidia’s performance.  

Nvidia is set to release its first-quarter fiscal 2026 results after the market closes today. Analysts expect Nvidia to post adjusted earnings per share (EPS) of $0.74, up 21.3% year-over-year. Meanwhile, sales are expected to surge 66.5% year-over-year to $43.34 billion in Q1.

Here’s Why Munster Is Bullish on Nvidia

Munster has remained a long-time Nvidia bull, with his hedge fund holding 124,872 shares of the chipmaker. Notably, Nvidia is the second-largest holding in Deepwater Asset Management’s portfolio, with a 5.73% allocation as of March 31, 2025. Nvidia closely follows another semiconductor player, Taiwan Semiconductor Manufacturing (TSM), of which the fund holds 81,632 shares.

Let’s take a brief look at Munster’s three takeaways.

Impact of the U.S. chip export restrictions on China – Munster expects that the impact of the Trump administration’s high-bandwidth memory (HBM) chip export curbs on China will reduce Nvidia’s revenues by $15 billion over the next three quarters. Deepwater estimates that about 25% of Nvidia’s FY25 revenue ($50 billion in calendar 2025) was China-related. Of this, $20 billion flows officially to China, while the rest flows through third parties, based outside of China. Thus, the chip curbs effectively only impact a part of the China-related revenues.

Meanwhile, Nvidia is also exploring ways to recapture lost market share by designing a low-bandwidth Blackwell-family chip for China. Munster predicts that once this chip hits the market, it would add back $5 billion in lost revenues per quarter.

Underlying GPU Demand Remains Strong – Munster stated that investors should focus on details indicating that the underlying demand for Nvidia’s Graphic Processing Units (GPUs) remains strong. For instance, management commentary hinting that demand from non-China customers is surpassing expectations. The company could also suggest that the export restrictions are temporary and could ease as part of the U.S.-China trade deal. Apart from China, Munster believes that overall demand for Nvidia’s products is expected to increase.

Ongoing AI Buildout Expected to Accelerate – Deepwater noted that the ongoing AI buildout remains in its early stages and is expected to accelerate, offsetting the effects of export curbs. He pointed to Elon Musk’s AI startup xAI’s massive data center project, which aims to buy one million Blackwell GPUs over the next two years, potentially adding $30 to $40 billion in revenue.

Similarly, Nvidia could earn incremental revenue from OpenAI’s growing GPU demand and from other tech giants like Apple’s (AAPL), which are increasing their AI infrastructure investments. Moreover, Munster pointed out that the Street predicts a 56% revenue growth in CY25 and 26% in CY26. However, with hyperscalers bolstering their AI capex, Nvidia could easily surpass those expectations.

Importantly, Munster noted that in the latter part of this year, if management reiterates that revenue will re-accelerate with a ramp in Blackwell supply, then Nvidia has strong potential to grow its future earnings.

Is NVDA Stock a Buy, Hold, or Sell?

On TipRanks, NVDA stock has a Strong Buy consensus rating based on 32 Buys, four Holds, and one Sell rating. Also, the average Nvidia price target of $164.21 implies 21.2% upside potential from current levels. In the past year, NVDA stock has gained nearly 19%.

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