Key Takeaways
- Bank of America forecasts Nvidia will deliver Q2 revenue of $94B-$95B, surpassing the company’s $91B guidance, with Q3 outlook at $107B-$108B
- The chipmaker’s forward P/E ratio of 16x based on 2027 earnings projections marks a 10-year low, according to BofA analysts
- Concerns surrounding memory component costs are deemed “overblown,” with gross margin forecasts stable at 73%-74%
- The company has allocated approximately $70B in equity investments to ecosystem partners, with $30B directed to OpenAI alone
- Bank of America reaffirms Buy rating with $350 price target, forecasting earnings per share exceeding $25 by 2030
Shares of Nvidia began Friday’s trading session at $223.96, marking a 2.3% gain, with the stock hovering close to its 12-month peak of $236.54. This week, BofA Global Research published an analyst note arguing that despite the stock’s impressive rally, it remains attractively valued relative to its historical trading patterns.
According to the investment bank, Nvidia currently trades at just 16 times its estimated 2027 earnings per share—representing the company’s lowest forward price-to-earnings valuation in a full decade. BofA analysts reiterated their Buy rating alongside a $350 price objective, designating Nvidia as their preferred pick within the semiconductor sector.
The company is scheduled to announce quarterly results following market close on Wednesday, August 26.
Analysts Predict Q2 Revenue Exceeding Guidance with Robust Q3 Forecast
Bank of America analysts anticipate Nvidia will report fiscal second-quarter revenue in the $94B to $95B range, comfortably above the company’s official guidance of $91B. Looking ahead to Q3, the bank projects revenue between $107B and $108B, exceeding Wall Street’s consensus estimate of approximately $104B.
The optimistic outlook stems partially from the commencement of shipments for Nvidia’s upcoming Vera Rubin chip architecture, which BofA characterizes as the beginning of an extended, multi-quarter product refresh cycle.
Current spot market pricing for GPU rentals has reached $5.66 per hour for B200 processors, approaching all-time peak levels. BofA forecasts Nvidia will command between 65% and 70% of the AI accelerator market throughout the remainder of the decade.
Rising Memory Component Costs Present Minimal Margin Threat
Among the primary concerns investors face approaching the earnings report is the potential impact of escalating memory costs. DRAM components now account for 40% to 50% of total manufacturing expenses, compared to the historical 15% to 20% range.
Bank of America analysts challenge this narrative. They contend Nvidia’s robust pricing authority and strategic supplier relationships with companies like SK Hynix will mitigate potential headwinds. For Vera Rubin NVL computing racks specifically, memory cost increases represent merely 60 basis points of margin compression relative to the existing Blackwell Ultra platform.
The bank projects overall gross margins will settle within a 73% to 74% band going forward, compared to approximately 75% currently.
BofA analysts also examined concerns regarding Nvidia’s venture capital commitments. Their analysis reveals Nvidia has deployed roughly $70B in direct equity investments across ecosystem partners, with $30B allocated to OpenAI and as much as $10B to Anthropic. Given projected free cash flow of $469B spanning 2026 and 2027, BofA concludes the company’s financial position remains robust enough to support these investments.
Nvidia’s most recent quarterly disclosure, released May 20, revealed Q1 revenue of $81.61B, representing 85.2% year-over-year growth, alongside EPS of $1.87, surpassing analyst expectations of $1.76. Management also announced an $80B share repurchase authorization and increased the quarterly dividend to $0.25 per share.
Wall Street consensus currently reflects a Buy rating with an average price objective of $304.26. BofA’s $350 target places it among the most bullish forecasts from major financial institutions.
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