By Bram Berkowitz
Publication Date: 2026-04-07 22:00:00
While market conditions have been turbulent this year, largely due to the Iran war, it’s hard to imagine investors could have asked for more from Nvidia (NVDA +0.07%) thus far.
The artificial intelligence (AI) chip giant recently delivered a knockout earnings report and provided several important updates on its business and guidance. Yet the stock is down over 6% this year. Do Wall Street analysts know something that hedge funds don’t? They’ve continued to increase their earnings estimates, while investors have sold the stock.
Understanding the analyst-hedge fund relationship
While retail investors have become a bigger part of financial markets in recent years, the smart money, or the institutions, such as hedge funds, asset managers, and insurance companies, still represent the bulk of flows and therefore have the most influence.
Image source: Nvidia.
While it varies, funds typically charge high fees, such as the 2-and-20 structure, where investors pay a 2% annual fee to buy into a fund, which then also takes 20% of profits above a certain threshold. Investors pay these fees to generate annual returns that beat the market, so most funds invest on a near-term basis, usually 12 to 18 months.
Wall Street analysts, who typically don’t own the stocks they cover, cater to these funds by providing coverage of stocks they may be interested in, with the ultimate goal of getting them to purchase shares with their prospective broker’s equity trading desk.
Analysts regularly model…
