TLDR
- BofA expects Nvidia to report Q2 revenue of $94B-$95B, above its own $91B guidance, with Q3 guided at $107B-$108B
- Nvidia’s forward P/E of 16x projected 2027 EPS is its lowest in 10 years, per BofA
- Memory cost risks are described as “overblown,” with gross margins expected to hold at 73%-74%
- Nvidia has committed roughly $70B in equity to ecosystem partners, including $30B to OpenAI
- BofA maintains a Buy rating and $350 price target, projecting Nvidia EPS of $25+ by 2030
Nvidia stock opened at $223.96 on Friday, up 2.3%, with the stock sitting near its 12-month high of $236.54. BofA Global Research put out a note this week making the case that despite that run-up, the stock is actually cheap by its own historical standards.
The bank says Nvidia is trading at 16 times projected 2027 earnings per share. That is its lowest forward price-to-earnings multiple in 10 years. BofA kept its Buy rating and a $350 price target, calling Nvidia its top sector pick.
Earnings are due after the close on Wednesday, Aug. 26.
BofA Sees Q2 Revenue Beat and Strong Q3 Outlook
BofA expects Nvidia to report fiscal Q2 revenue between $94B and $95B, ahead of the company’s own guidance of $91B. For Q3, the bank is projecting $107B to $108B, above the street consensus of around $104B.
The bullish case is tied in part to the start of shipments for Nvidia’s next-generation Vera Rubin chips, which BofA says kicks off a multi-quarter upgrade cycle.
Spot GPU rental prices have climbed to $5.66 per hour for B200 chips, near record highs. BofA expects Nvidia to hold 65% to 70% of the AI accelerator market through 2030.
Memory Costs Less of a Risk Than Feared
One of the bigger concerns circling Nvidia heading into earnings is rising memory costs. DRAM now makes up 40% to 50% of total build costs, up from 15% to 20% historically.
BofA pushed back on that worry. It argues Nvidia’s pricing power and sourcing relationships with suppliers like SK Hynix limit the damage. On Vera Rubin NVL compute racks, memory costs represent just 60 basis points of margin headwind versus the current Blackwell Ultra.
Overall gross margins are expected to stabilize in a 73% to 74% range over time, compared to roughly 75% today.
BofA also addressed concerns about Nvidia’s venture commitments. The bank calculated Nvidia has put roughly $70B in direct equity into ecosystem partners, including $30B into OpenAI and up to $10B into Anthropic. With $469B in projected free cash flow across 2026 and 2027, BofA says the balance sheet can handle it.
Nvidia’s last earnings report, from May 20, showed Q1 revenue of $81.61B, up 85.2% year over year, with EPS of $1.87, beating estimates of $1.76. The company also authorized an $80B share buyback and raised its quarterly dividend to $0.25.
Analyst consensus sits at a Buy rating with an average price target of $304.26. BofA’s $350 target is among the more aggressive on the street.
Stop guessing and start investing with confidence. KnockoutStocks gives you the AI insights, market intelligence, and stock research you need to spot opportunities, cut through the noise, and make smarter investment decisions — all in one powerful platform.
Sign up today and get 50% OFF full access to our premium stock picks.
Simply use coupon code SPECIAL50 at checkout to claim your exclusive discount.
