Bank of America (BofA) forecasts that Nvidia (NASDAQ: NVDA) will slightly beat earnings estimates when it reports its fiscal fourth-quarter results on February 26. However, the bank’s analysts warn that near-term headwinds could affect the company’s outlook for the first quarter.
BofA analysts wrote,
“We expect a modest FQ4 beat but F1Q outlook could face headwinds from Blackwell transition, Hopper declines, and China restrictions.”
Despite potential volatility post-earnings, BofA expects Nvidia to regain momentum as investors turn their attention to its next-generation product pipeline.
BofA maintains Nvidia (NASDAQ: NVDA) as its top pick in the sector, highlighting the company’s unique position as more than just a chipmaker—it sees Nvidia as a “computing platform.”
The analysts emphasize the company’s strength in integrating hardware and software optimizations, an advantage in the fast-evolving AI landscape.
BofA also believes Nvidia’s valuation remains attractive, noting its price-to-earnings (P/E) ratio of 31x and 24x for projected earnings in 2025 and 2026, placing it at the lower end of its historical 25x-56x range.
Analysts expect the upcoming GTC conference on March 17 to be a significant catalyst, with Nvidia set to unveil new chips, including the GB300 and Rubin, as well as expand its reach into robotics and quantum computing.
Meanwhile, the broader semiconductor sector remains strong. The Philadelphia Semiconductor Index (SOX) rose 3% last week, outpacing the S&P 500’s 1.5% gain. BofA also notes that diversified industrial and auto semiconductor stocks, especially those with less exposure to AI, have benefited from a recovery in European markets, stimulus measures in China, and reduced concerns over industrial inventories.
