Bank of America reiterated its "buy" rating on Nvidia and raised its price target from $320 to $350 following the chipmaker's record first-quarter earnings, which saw revenue reach $81.6 billion—up 85% year-over-year and exceeding analyst expectations of $79.1 billion by 3.1%. The stock declined despite the beat and raised guidance, continuing a pattern where Nvidia has fallen after three of its last four earnings calls. BofA's lead analyst Vivek Arya named Nvidia a top pick, with the new $350 target implying 56.6% upside from the stock's price of $223.47.
The bank's analysis centers on the scale of the market Nvidia is selling into rather than single-quarter results. BofA raised its total addressable AI market estimate from $1.7 trillion to over $3 trillion by 2030, modeling Nvidia holding roughly 78% of the AI accelerator market—the chips specifically built to run AI workloads. The bank also upgraded its estimate for the agentic CPU market from $125 billion to $200 billion, with Nvidia already securing $20 billion in demand for the second half of the fiscal year.
Q1 Earnings Breakdown
Nvidia's data center revenue—the engine driving growth—hit $75.2 billion, up 92% year-over-year, split nearly evenly between major cloud providers like Amazon and Microsoft and a growing mix of AI companies, industrial clients, and other enterprises. Earnings per share came in at $1.87 on an adjusted basis, beating the $1.73 analysts expected. Gross margin held steady at 75%, while free cash flow for the quarter reached $48.6 billion. CEO Jensen Huang commented on the earnings call: "Agentic AI has arrived, doing productive work, generating real value and scaling rapidly."
Customer Commitments and Locked-in Demand
Customer purchase commitments totaled $145 billion this quarter, up from $95 billion three months prior. These represent contracts rather than speculative demand. AWS alone has committed to deploying approximately 1 million Nvidia GPUs through 2027.
Key Risks
BofA identified two primary risks for investors. The first concerns Nvidia's market concentration: the stock now represents 8.3% of the entire S&P 500 index, with approximately 78% of active fund managers already holding it. This concentration limits the pool of potential new buyers who could drive the stock price higher.
The second risk involves custom chips developed by hyperscale cloud companies. Google recently launched its eighth-generation in-house AI chips designed to reduce Nvidia dependence. BofA counters that it expects Nvidia to maintain more than 70% of the accelerator market long-term, citing full-platform support and AI factory infrastructure as advantages custom chips cannot replicate.
Forward Projections
BofA raised its earnings-per-share estimates by 9% for fiscal 2027 to $9.09 and by 15% for fiscal 2028 to $13.27. The company earned $4.55 per share in the last fiscal year. At the current price, Nvidia trades at 19.7 times its estimated 2027 earnings.
Free cash flow is projected to grow from $96.7 billion last fiscal year to $186.8 billion in fiscal 2027 and $282 billion in fiscal 2028. Nvidia raised its quarterly dividend 25-fold, from $0.01 to $0.25 per share, and announced an $80 billion additional share buyback authorization, bringing total repurchase capacity to approximately $120 billion.
Next Catalyst
CEO Jensen Huang is scheduled to deliver a keynote at Computex on June 1, where BofA expects him to detail Nvidia's agentic AI roadmap and CPU strategy.
