BofA analyst Vivek Arya sees a long-term opportunity for Nvidia, estimating that the company could reach $20 to $25 in long-term earnings per share. He forecasts AI servers to grow at a 37% compounded annual growth rate from 1.23 million in 2023 to 4.4 million by 2027, enabling Nvidia's total sales to expand at a 26% CAGR to $109 billion. Other Wall Street banks also have high revenue projections for Nvidia, with Mizuho suggesting the company could generate more than $300 billion in revenue by 2027.
Key takeaways:
- Nvidia remains a 'top sector pick' at Bank of America, with a 'Buy' rating and a $550 price target, suggesting a potential upside of 22% from current levels.
- The company's upcoming 2nd-quarter earnings report is expected to show 'less shock and awe' and more about execution, with the ability to scale supply to meet demand being a key factor.
- Bank of America's Vivek Arya expects Nvidia to report second-quarter revenue of at or slightly above $11 billion, representing year-over-year revenue growth of 64%, and third-quarter revenue to accelerate up to 100% to about $12 billion.
- Arya estimated that Nvidia could 'march towards' $20 to $25 in long-term earnings per share, which would help make its current forward price-to-earnings ratio of 39x more digestible for investors.