Analyst Vivek Arya sees 64% upside as Nvidia's AI commitments and cash generation dwarf perceived financing risks
Bank of America analyst Vivek Arya is sticking with his Buy rating on Nvidia and a $350 price target, a call that implies roughly 64% upside from where the stock has been trading near $213 to $220. The note landed just ahead of Nvidia’s fiscal Q2 2027 earnings release on August 26, making it less a prediction and more a public dare to the bears.
The dare aged well. Nvidia posted fiscal Q2 revenue of $96.2 billion, a 106% jump year-over-year, with earnings per share coming in at $2.22. The company guided for approximately $108 billion in revenue for the following quarter.
Why BofA thinks the market is mispricing Nvidia
Arya’s thesis boils down to a mismatch between what Nvidia actually generates in cash and what the market thinks could go wrong with AI financing. Nvidia has committed approximately $300 billion to AI-related capital initiatives, a number that includes around $70 billion in equity investments and $230 billion in guarantees or backstops tied to data-center infrastructure.
That $300 billion figure sounds enormous until you stack it against Nvidia’s projected free cash flow. BofA estimates the company will generate roughly $469 billion in free cash flow over the next two years. In other words, the AI commitments that have spooked some investors represent about 64% of near-term cash generation.
Nvidia is trading at roughly 16 to 18 times forward earnings, levels that represent multi-year lows for a company growing revenue at this pace. A company projected to grow revenues by 70% in calendar 2027 trading at under 20 times forward earnings would typically be considered a bargain in most market environments. BofA’s argument is that investors are treating AI financing risk as a structural overhang when it’s more of a speed bump relative to Nvidia’s cash-printing capabilities.
Wall Street consensus is solidly bullish
Arya isn’t alone in his optimism. Following the earnings release, Goldman Sachs adjusted its price target upward to $300, while Mizuho moved to $315. The broader Wall Street consensus sits at a Strong Buy rating with an average price target in the $306 to $309 range.
Nvidia’s equity investments have approached $99 billion, with up to $108.5 billion in guarantees related to data-center backstops. The company isn’t just selling chips into the boom; it’s financing and guaranteeing the facilities where those chips run.
The AI infrastructure arms race in numbers
A 70% revenue increase anticipated for calendar 2027 would build on the 106% year-over-year growth reported in the most recent quarter. Compounding at those rates, even for a company already generating nearly $100 billion per quarter, moves Nvidia into territory that few technology companies have ever occupied.
What bears will watch is whether the guarantee and backstop commitments, now approaching $108.5 billion, start converting into actual losses as AI projects face delays or cancellations. BofA’s view is that the $469 billion two-year cash flow cushion makes those risks manageable.
