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
- Concerns about rising memory expenses are “overblown,” with gross profit margins anticipated to remain between 73%-74%
- The company has allocated approximately $70B in equity investments to ecosystem partners, with $30B directed to OpenAI
- BofA reaffirms Buy rating with $350 price target, forecasting earnings per share exceeding $25 by 2030
Nvidia shares began Friday’s session at $223.96, gaining 2.3%, trading close to its 12-month peak of $236.54. This week, BofA Global Research released analysis arguing that despite the recent rally, the stock remains attractively valued compared to its historical trading patterns.
According to the investment bank, Nvidia currently trades at 16 times its estimated 2027 earnings per share—representing the lowest forward price-to-earnings ratio the company has seen in a decade. BofA reaffirmed its Buy recommendation alongside a $350 price target, designating Nvidia as its preferred choice within the semiconductor sector.
The company is scheduled to announce earnings results following Wednesday, Aug. 26’s market close.
Analysts Anticipate Q2 Revenue Surprise and Robust Q3 Guidance
Bank of America anticipates Nvidia will announce fiscal Q2 revenue ranging from $94B to $95B, surpassing the company’s official guidance of $91B. Looking ahead to Q3, the firm projects revenue between $107B and $108B, exceeding Wall Street’s consensus estimate of approximately $104B.
The optimistic forecast partly stems from the commencement of Nvidia’s Vera Rubin next-generation chip deliveries, which BofA believes will trigger an extended upgrade cycle spanning multiple quarters.
Current market rates for GPU rentals have risen to $5.66 hourly for B200 chips, approaching all-time peaks. BofA projects Nvidia will maintain between 65% and 70% market share in AI accelerators through the end of the decade.
Rising Memory Expenses Pose Limited Threat
Among the primary concerns surrounding Nvidia before earnings is the escalating cost of memory components. DRAM currently accounts for 40% to 50% of total manufacturing costs, a significant increase from the historical range of 15% to 20%.
BofA challenges this concern. The bank contends that Nvidia’s strong pricing leverage and strategic supplier relationships with companies like SK Hynix mitigate potential margin pressure. For Vera Rubin NVL compute platforms, memory cost increases translate to merely 60 basis points of margin compression compared to the existing Blackwell Ultra architecture.
The firm expects overall gross profit margins to settle within a 73% to 74% band long-term, modestly below the current level of approximately 75%.
BofA also examined questions surrounding Nvidia’s venture capital activities. The bank estimates Nvidia has deployed roughly $70B in direct equity investments across ecosystem partners, including $30B in OpenAI and as much as $10B in Anthropic. With anticipated free cash flow of $469B throughout 2026 and 2027, BofA concludes the company’s financial position remains solid.
During its previous quarterly report on May 20, Nvidia posted Q1 revenue of $81.61B, representing 85.2% year-over-year growth, alongside EPS of $1.87 that exceeded the $1.76 consensus. The company simultaneously announced an $80B stock repurchase authorization and increased its quarterly dividend to $0.25 per share.
Wall Street consensus currently reflects a Buy rating with a mean price target of $304.26. BofA’s $350 objective ranks among the most bullish forecasts from major analysts.
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