Bank of America doubles down on Nvidia stock

Bank of America has reinforced its bullish stance on Nvidia stock, rejecting the notion that the market had correctly valued the company's aggressive use of its balance sheet. Analyst Vivek Arya reiterated a Buy rating and a $350 price target, suggesting roughly 64% upside from the stock's previous trading level. Nvidia reported revenue of $96.2 billion for Q2 2027, a 106% year-over-year increase, well above consensus expectations.

The company's data center revenue reached $89 billion, up 117% from the prior year, while gross margin remained steady at 75%. Bank of America emphasized that the market had underappreciated Nvidia's financial commitments to the AI ecosystem, estimating total capital investments of about $300 billion, with significant equity and backstop commitments.

The bank's analysis suggests Nvidia could generate $469 billion in free cash flow over the next two years if AI demand remains robust, representing only 10% of its enterprise value. The analyst also highlighted Nvidia's potential for increased buybacks, similar to Apple's approach, which could further bolster the stock's valuation.