Bank of America reiterated its 'Buy' rating and $190 price objective for NVIDIA Corp (NASDAQ:NVDA, ETR:NVD), citing the company’s dominant position in AI infrastructure despite delivering fourth-quarter guidance that fell short of bullish investor expectations.
While fiscal third-quarter results were solid, Nvidia’s Q4 revenue forecast of $37.5 billion, slightly above consensus, disappointed those anticipating closer to $40 billion.
Still, Bank of America views the long-term outlook as strong, driven by Nvidia’s leadership in transitioning $1 trillion in legacy infrastructure to accelerated systems and free cash flow potential exceeding $200 billion across 2025 and 2026.
Analysts highlighted sustained demand for Nvidia’s Blackwell GPUs, which is expected to outstrip supply for several quarters, and resilient sales of Hopper chips. Gross margins are projected to dip to the low 70% range during the Blackwell ramp but recover to the mid-70s in fiscal 2026.
Key risks include high investor expectations, rapidly rising operating expenses, supply chain constraints, and uneven capital expenditure trends among major cloud customers. However, demand from Tier 2 cloud providers, enterprises, and sovereign entities is expected to broaden.
While Nvidia shares may face near-term headwinds, Bank of America emphasized its favorable valuation—0.6x PEG versus large-cap tech peers’ 2.2x—and reiterated confidence in the company’s ability to capitalize on AI-driven growth.