Nvidia earnings preview: Top 5 debates ahead of earnings

Investing.com -- Bank of America maintained a Buy rating and $320 price target on Nvidia ahead of the chipmaker’s fiscal first-quarter results due after the close on Wednesday, identifying five key debates likely to dominate investor focus beyond the headline beat-and-raise dynamics the firm expects.

Analyst Vivek Arya said BofA anticipates Nvidia will outperform current sell-side revenue expectations by 2% to 4%, or $2 billion to $4 billion.

The five debates the firm expects to drive the stock’s reaction are enhanced cash returns potential, the ramp timing of the Vera Rubin architecture in the second half of 2026, gross margin durability at approximately 75% amid continued memory and component cost inflation, an update to the company’s $1 trillion calendar year 2025 to 2027 revenue forecast, and the competitive threat from Google’s tensor processing units, agentic central processing units and other custom chips.

On cash returns, BofA noted Nvidia has allocated only 47% of free cash flow from 2022 to 2025 to dividends and buybacks, well below the roughly 80% returned by large-cap technology peers.

The firm said its ecosystem investments in companies, including OpenAI and Anthropic, have been "unfairly characterized as circular/vendor financing," but argued that boosting shareholder returns could expand ownership and close a valuation gap that currently sits below 20 times calendar 2027 earnings.

On competition, BofA told investors that Nvidia has built what it called an "unparalleled standardized infrastructure" across software, developer tools and multi-cloud availability, and expects the company to sustain approximately 70% revenue share in a total addressable AI market exceeding $1.7 trillion by 2030.

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