NVIDIA (NASDAQ: NVDA) CEO Jenson Huang says the company has 0% GPU market share in China, but that’s only the official picture. It makes no direct sales to China, as the advanced Blackwell lineup is banned, and the firm's H200s are heavily restricted.
There is, however, a booming gray market in which smuggled hardware still may account for a double-digit share of China’s market. With U.S restrictions rising and supply tightening, prices are rising to extraordinary levels, indicating the strength of demand.
The risk for investors is how much of NVIDIA’s backlogged revenue stems from China, and how strongly (if at all) U.S. controls will affect upcoming results.
In its upcoming earnings release on May 20, NVIDIA is expected to report accelerated sequential and year-over-year (YOY) growth, with the top line approaching 78% YOY and margins widening.
The bar is set high, as nearly 100% of analysts covering the stock have increased their forecasts ahead of the release, so there is some risk, but outperformance is likely.
NVIDIA’s Analysts Set High Bar: Outperformance Expected
NVIDIA’s news stream has been unrelenting over the past months, including a new infrastructure release from Alphabet (NASDAQ: GOOGL) that scales nearly 1 million GPUs across a multi-site cluster capable of 10 times the throughput. While not a new datacenter, the news is yet another affirmation that the datacenter buildout is real and underpinned by upcoming next-generation technology, i.e., NVIDIA’s Vera Rubin products. Additionally, CapEx plans from hyperscalers (including Alphabet) indicate accelerated data center investment, suggesting robust demand for new GPUs.
Catalysts for the stock price will be the guidance as much as the quarterly performance. Huang has cited a trillion-dollar backlog for its Blackwell and Rubin lines through 2027, and is likely to update. Given the trends, the update is likely to be an increase; the question is how big it will be and how the market responds.
NVDA's price action has been tepid relative to other chip stocks, so it may take a significant catalyst to get it back into rally mode. Chip stocks ranging from Intel to Texas Instruments (NASDAQ: TXN), Analog Devices (NASDAQ: ADI), and onsemi (NASDAQ: ON) rallied strongly in late Q1 and early Q2 2026 as signs of a broad-based semiconductor supercycle emerged.
Analyst sentiment trends reveal optimism and a high conviction in future stock price increases. MarketBeat tracks 54 analysts with current coverage, coverage increasing over the trailing 12 months, a 96% bias to the consensus Buy rating, and an uptrend in the price target. The price targets are an operational factor in this scenario, as the consensus forecasts a 40% upside and revision trends suggest as much as 100% is possible.
NVIDIA Is Underpriced But Won’t Stay That Way for Long
Valuation metrics also suggest a triple-digit upside is possible, as NVIDIA continues to trade at a discount to its historical norm and long-term estimates. Forward-looking estimates put the stock price in the single-digit multiple range relative to its earnings, suggesting it can rise by several hundred percentage points from its early May trading levels.
Other catalysts for this stock are its acquisition pipeline, which is accelerating alongside its cash flow, and its positioning for long-term sustainable growth and AI market dominance. Acquisitions focus on advancing adjacent AI technologies, including physical AI applications in robotics and automotive, providing pathways to new and potentially growable revenue streams. The takeaway for investors is that Huang is not relying solely on data centers to fuel NVIDIA’s future but is actively working to secure it. NVIDIA’s existing work with China is limited to these paths.
Analysts Eye NVIDIA Cash Flow for Catalysts
NVIDIA’s cash flow could be a catalyst, and analysts have started to mention it in their commentary: increased capital return. The company’s robust revenue growth underpins equally impressive margins and cash flow, which have enabled its acquisitions, investments, and balance sheet improvements.
The last report revealed more than $62 billion in cash, up approximately 45% YOY, and a net cash position relative to total liability that leaves enough cash for a sizeable capital return. Cash flow and balance sheet details suggest a solid triple-digit increase is possible and that future increases would remain sustainable.
NVIDIA faces risks, including from Advanced Micro Devices (NASDAQ: AMD) and its upcoming MI450 launch, but the downside to the stock price is limited. Institutions own more than 65% of the stock and have been accumulating at a robust $3-to-$1 pace in recent quarters. Early Q2 activity is capping gains ahead of the release, but setting up an entry point that is likely to be confirmed when the Q1 earnings report is released.
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The article "NVIDIA’s China Connection: Investor Risks With Earnings Ahead" first appeared on MarketBeat.
