Bank of America analyst Vivek Arya has named Nvidia (NVDA) his top sector pick ahead of the chipmaker’s upcoming fiscal second quarter results.
Arya maintains a Buy rating and a $350 price target on Nvidia, implying more than 55% upside from the $223.96 level at the time of the note.
The analyst argues that Nvidia is currently trading at approximately 16 times forward earnings, representing its lowest valuation in roughly a decade despite a rising earnings trajectory.
BofA projects Nvidia’s earnings per share climbing from $4.55 in calendar 2026 to $9.09 in calendar 2027, with long-term earnings expected to exceed $25 by 2030.
Arya described Nvidia as a “unique, durable growth franchise” trading at approximately 18 times forward earnings, a valuation he characterized as a seven-year low.
Bank of America also raised its calendar year 2030 AI data center systems total addressable market forecast to roughly $1.7 trillion, up from $1.4 trillion previously.
Nvidia confirmed at GTC Taipei in June that its next-generation Vera Rubin platform has entered full production, with cloud deployments expected in the second half of 2026.
AWS, Google Cloud, Microsoft, and Oracle are already preparing Vera Rubin deployments, with OpenAI, Anthropic, and SpaceX among the first customers lined up.
Vera Rubin NVL computing racks may carry price tags between $7 million and $8.5 million, compared with approximately $4 million for the current Blackwell Ultra generation, creating a significant revenue tailwind.
BofA estimates Nvidia can generate $470 billion of free cash flow across calendar 2026 and 2027 combined, making its nearly $70 billion of committed ecosystem investments equal to just around 15% of that projected total.
Arya expects Nvidia to post Q2 revenue of $94 billion to $95 billion, roughly $3 billion to $4 billion above the company’s own guidance of $91 billion.
On the question of gross margins, BofA estimates DRAM expenses now account for 40% to 50% of Nvidia’s total production costs, up sharply from a historical range of 15% to 20%.
The firm dismissed the cost concern as overblown, estimating the margin impact from Vera Rubin racks at just 60 basis points, with gross margins expected to hold in the 73% to 74% range.
Nvidia’s long-term supply agreements with chipmakers such as SK Hynix provide a meaningful buffer against potential memory price spikes, according to BofA.
Arya did warn that weaker AI demand could hurt Nvidia’s growth and put pressure on its balance sheet, with investors set to get more clarity when the company reports earnings on August 26.
