Zinger Key Points
- BofA's Vivek Arya maintains a Buy on Nvidia, calling it his top pick ahead of Q4 earnings despite China restrictions and margin pressure.
- Arya expects Nvidia to reassure investors on Blackwell execution, signal strong 2025 growth, and highlight AI pipeline at GTC Conference.
- Get the Real Story Behind Every Major Earnings Report
BofA Securities analyst Vivek Arya maintained a Buy rating on Nvidia Corp NVDA with a price target of $190.
Nvidia is Arya’s top pick ahead of the company’s fourth-quarter earnings call scheduled for February 26. Given the Blackwell product transition and China restrictions, the analyst expects a modest beat, inline sales guidance, and lower gross margin in the first quarter.
However, the call could mark the trough in investor sentiment as Arya expects Nvidia to reassure on Blackwell execution, signal confidence around fiscal 2026 and calendar 2025 with 60%+ growth in data center sales, and create excitement ahead of the flagship GTC Conference on March 17 where focus shifts to solid pipeline (GB300, Rubin), and physical AI (robotics).
Meanwhile, Nvidia stock is trading at a compelling ~26 times calendar 2025E PE (lower end of 25-59 times, median 39 times NTM PE).
Despite DeepSeek’s supposed “revolutionary” optimizations, spending intentions at Nvidia’s large customers, including Microsoft Corp MSFT and Meta Platforms Inc META, have remained unchanged thus far.
Nvidia is the leading platform for delivering computing, driven by frontier-model training, heading towards artificial general intelligence (AGI), derivative model training (like DeepSeek), and AI inference, where compute requirements grow 3-5 times due to newer reasoning and more accuracy models, and traditional to accelerated infrastructure upgrades.
While the mix between the four drivers could evolve, Arya noted the overall pie growing over time (~$500 billion TAM by calendar 2028 and 2029, 5 times and 2.5 times versus calendar 2024 and 2025).
From the calendar, 2018-24, performance (in FLOPS) for Nvidia processors went up 1000 times, yet its data center sales also went up 300 times, so one did not cannibalize but grew the other. Optimizations in hardware and software are key parts of computing.
Arya expects greater enforcement of the AI Diffusion rules set forth by the Biden administration. He expects rising demand from the West (US cloud, enterprise, OpenAI Stargate, etc.) to offset China’s headwinds for Nvidia.
Arya likes both GPU (Nvidia) and ASIC vendors (Broadcom Inc AVGO, Marvell Technology, Inc MRVL) on the rising tide of AI compute/networking demand but does not yet see any evidence of GPUs losing their 80%+ share and ASICs taking more than a 10%-15% share of the overall accelerator market.
Inference is becoming more, not less, compute-intensive, while Broadcom highlighted the large clusters on its last call as being used for training (where Nvidia dominates) rather than inference.
Nvidia’s consistent co-optimization of hardware and software, along with its large enterprise moat, will be tough for ASIC vendors to overtake, Arya added.
For Nvidia, Arya projected fourth-quarter revenue of $38.7 billion and adjusted EPS of $0.86.
Price Action: NVDA stock is up 2.45% at $119.52 at the last check on Tuesday.
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