BofA Forecasts Strong Revenue Growth
BofA Global Research expects Nvidia to report fiscal second‑quarter revenue of $94 billion to $95 billion, topping its own guidance of $91 billion, and projects third‑quarter sales of $107 billion to $108 billion, well above the consensus estimate of roughly $104 billion. Nvidia is slated to release its results after market close on Wednesday, 26 August.
Valuation and Rating
The brokerage maintains a Buy rating with a $350 price target, labeling Nvidia its top sector pick. The stock now trades at about 16 times projected 2027 earnings per share, the lowest forward price‑to‑earnings multiple for the company in a decade.
Margin Pressures and Mitigations
BofA notes two traditional pressure points—rising component inflation and vendor‑financing schemes—but argues that memory‑cost headwinds on the upcoming Vera Rubin systems are limited to roughly 60 basis points. DRAM currently accounts for 40 % to 50 % of total build costs, up from a historical 15 % to 20 %, yet Nvidia’s pricing power, preferential sourcing from SK Hynix, and premium rack‑scale pricing are expected to contain the impact. On NVL compute racks, High‑Bandwidth Memory and LPDDR costs are estimated at 12.7 % of the rack price, translating to the 60‑basis‑point margin drag versus the current‑generation Blackwell Ultra. Full‑system pod integration could cause up to a 500‑basis‑point gross‑margin dilution, but BofA expects the initial volume of such pods to remain small. Overall gross margins are projected to settle in a 73 % to 74 % range over time, compared with roughly 75 % today.
Capital Commitments and Cash Flow
BofA calculates that Nvidia has pledged about $70 billion in direct equity to ecosystem partners, including $30 billion to OpenAI and up to $10 billion to Anthropic. The firm is expected to generate $469 billion of free cash flow across calendar years 2026 and 2027, of which 15 %—approximately $70 billion—will be allocated to these equity commitments. Nvidia also intends to return 50 % of its free cash flow to shareholders. A separate $250 billion backstop has been reported for OpenAI’s lease of SoftBank Energy’s 10‑gigawatt Ohio campus; this is a contingent, back‑ended guarantee structured similarly to standard project‑finance deals rather than an upfront outlay.
Pricing Power and Market Share
Spot GPU rental prices are near record levels, with B200 chips fetching $5.66 per hour. BofA expects Nvidia to retain a dominant 65 % to 70 % share of the broader AI accelerator market through 2030 and projects annual earnings per share to exceed $25 by calendar year 2030.