Nvidia Eyes Strong Q2 Earnings Amid Investor Positioning

Nvidia is expected to report strong earnings for its second quarter, according to Cantor Fitzgerald analyst C.J. Muse.

Muse told CNBC that investor positioning could work in Nvidia's favor, as many hedge funds remain underweight the stock or use it as a funding short, while some long-only investors are also underweight.

Nvidia shares fell 1.3% in midday trading on Wednesday amid broader market weakness, but Muse expects the chipmaker to deliver a 'monster beat' when it reports second-quarter earnings after the market close.

Muse highlighted three potential catalysts for Nvidia's stock performance during the earnings call: a specific data-center revenue target for 2027, more detail on Nvidia's support for neocloud providers and its open-source AI efforts, and greater software and ecosystem exposure through investments in open-source AI models.