A market strategist argues that investors are treating NVIDIA (NVDA) as though the company has already lost the artificial intelligence race, a perception he believes is fundamentally misguided. In a client note issued Monday, Cantor Fitzgerald's C.J. Muse advised that now is the moment to "close your eyes" and make a substantial bet on the stock. While Muse is not entirely certain what the next catalyst for NVIDIA will be, he stated, "When this stock starts to move, we think the rally will be very, very swift."

Muse highlighted that based on highly optimistic earnings projections of $17 per share for calendar year 2027 and $25 per share for calendar year 2028, NVIDIA appears exceptionally inexpensive. He noted that the stock is currently trading at just 14 times those 2027 estimates and 10 times the 2028 projection. For investors who have confidence in NVIDIA's earnings power and its ability to capture more value within the AI ecosystem, he strongly recommends building a significant position. Muse's price target of $350 implies a 67% upside from current levels.

He believes that investors are currently "underweight" the stock, meaning NVIDIA holds a smaller share in portfolios than its weight in the broader market would suggest. Muse contends that NVIDIA has evolved beyond its role as a mere chip supplier. The company has adopted a controversial "financial engineering" approach, which includes taking equity stakes in AI firms like OpenAI and Anthropic, as well as entering into revenue-sharing agreements with next-generation cloud providers such as CoreWeave (CRWV) and Nebius Group (NBIS).

Muse views these maneuvers optimistically, asserting that they have yet to be fully recognized by the market. He said this strategy "is becoming increasingly critical, and we believe it will shine as the current strong AI infrastructure buildout progresses further." Concerns have emerged regarding NVIDIA's dominance in the AI semiconductor market as major cloud giants increasingly pivot toward custom chip projects. However, Muse argues that revenue sharing with new-age cloud providers represents a "more resilient" tactic, as NVIDIA is empowering data center construction that extends beyond the reach of the primary cloud operators. He added that NVIDIA is also broadening its customer base to include more enterprise and sovereign projects.

Muse further noted that NVIDIA is focusing on delivering complete AI systems encompassing racks, networking, and other components, a strategy supported by its revenue-sharing agreements. He said that NVIDIA's equity investments and revenue-sharing arrangements, combined with its plan to help raise $500 billion for AI infrastructure alongside top financial institutions, and deals to swap computing power for equity in AI startups, have turned its graphics processing units (GPUs) "into a financeable and increasingly fungible asset class." In his view, this makes NVIDIA "very difficult to bypass," even if it loses to competitors at some level of the technology stack. "Because it is often NVIDIA's financing and software that allow these hyperscale cloud providers' infrastructure to be built from scratch," Muse explained.

According to Dow Jones Market Data, NVIDIA shares fell 2.9% on Monday, marking their seventh consecutive session of declines, the longest losing streak since September 6, 2022. Year-to-date, NVIDIA stock has gained approximately 12%, compared to a 59% surge in the PHLX Semiconductor Index over the same period. Meanwhile, reports indicate that NVIDIA is planning to raise prices on its AI chip servers. Reports from last Saturday suggest that some of NVIDIA's major customers could face price increases exceeding 15%, depending on the chip generation and memory requirements of the systems. The report noted that shipments expected next year will carry the adjusted pricing.

Additional reports from Saturday indicated that NVIDIA is planning to build an open-weight AI model through a new $6 billion licensing deal with AI startup Poolside. NVIDIA is scheduled to release its fiscal second-quarter earnings after the market close on Wednesday.