Nvidia’s Stock: BofA’s Bull Case vs. Market Realities – Is $350 Just the Start?

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(SeaPRwire) –   By: Oliver Hawthorne

Nvidia’s stock has been on a rollercoaster, but Bank of America’s recent note cuts through the noise. The bank argues the chip giant remains undervalued despite its recent surge. BofA points to a forward price-to-earnings ratio of 16x for 2027 earnings, the lowest in a decade. Yet, investors are waiting with bated breath as earnings are due on August 26.

BofA’s bullish outlook starts with revenue projections. The bank expects Q2 revenue between $94 billion and $95 billion, surpassing the company’s own guidance of $91 billion. For Q3, BofA forecasts $107 billion to $108 billion, outpacing street consensus. The launch of next-generation Vera Rubin chips is a key driver, kicking off a multi-quarter upgrade cycle. Spot GPU rental prices for B200 chips are near record highs, signaling strong demand. BofA also sees Nvidia holding 65% to 70% of the AI accelerator market by 2030.

Memory costs were a concern, but BofA dismisses them as overblown. DRAM now makes up 40%-50% of build costs, up from 15%-20% historically. However, Nvidia’s pricing power and supplier relationships, like with SK Hynix, limit margin erosion. On Vera Rubin NVL compute racks, memory costs only create a 60 basis point headwind versus current models. Overall, gross margins are expected to stabilize in the 73%-74% range.

Nvidia’s venture commitments also come under scrutiny. The bank notes Nvidia has invested roughly $70 billion in ecosystem partners, including $30 billion in OpenAI. With projected free cash flow of $469 billion over 2026-2027, the balance sheet can handle the investments. Last earnings in May showed 85.2% year-over-year revenue growth, EPS of $1.87, and a $80 billion share buyback. Analyst consensus is a Buy, but BofA’s $350 price target is more aggressive. The AI boom continues to fuel Nvidia’s trajectory, with the next-gen chips and strong financials pointing to a sustained lead in the chip sector. Author bio: Oliver Hawthorne, a Principal Correspondent permanently stationed at an international technology review, specializes in dissecting tech industry dynamics and market forecasts.