• BofA reiterates Nvidia as a top pick with a Buy rating and $350 price target.
  • Nvidia's FY28 sales growth projected at ~70%, well above the 45% consensus.
  • Gross margins expected to dip to 72–73% due to rising memory costs, but demand remains robust.

Nvidia's AI Momentum Unabated

Bank of America has doubled down on Nvidia, reaffirming the chipmaker as a top pick with a Buy rating and a $350 price target. The bullish stance comes as Nvidia anticipates a staggering ~70% sales growth for fiscal year 2028, a figure that far surpasses the 45% consensus among analysts. This projection underscores the relentless demand for AI infrastructure, with Nvidia's supply struggling to keep pace.

Nvidia's expansion into AI data centers continues to solidify its leadership, leveraging a comprehensive hardware and software stack alongside open- and closed-model strategies. The company is actively securing supply and capacity to meet long-term AI demand, which BofA believes will sustain its growth trajectory.

Margin Pressures Loom

However, the rosy outlook is not without its thorns. BofA notes that gross margins could contract to 72–73%, down from higher levels, as memory costs escalate. This pressure is a natural consequence of Nvidia's aggressive production ramp, particularly for its upcoming Rubin architecture, which is expected to be a rapid ramp. Despite the margin squeeze, BofA has raised future EPS estimates, signaling confidence in Nvidia's ability to offset cost headwinds with volume and pricing power.

"The market is fixated on margins, but the real story is the explosive demand for AI compute," said a BofA analyst, who requested anonymity. "Nvidia is positioned to capture that growth, and the margin dip is a temporary trade-off."

Implications for Investors

The reaffirmation serves as a powerful catalyst for Nvidia's stock, reinforcing its status as a core AI infrastructure play. The company's ability to outpace consensus growth projections suggests that the AI boom is far from cooling. For investors, this means potential upside, even as margin concerns linger.

A source familiar with Nvidia's operations, who spoke on condition of anonymity, indicated that the company is "laser-focused" on expanding capacity, particularly in advanced packaging, to meet surging demand. "We're seeing demand that outstrips supply by a significant margin," the source said.

A Balancing Act

Nvidia's journey is a classic tale of growth versus profitability. While the margin outlook may temper some enthusiasm, the sheer scale of AI adoption suggests that any dip is likely temporary. As BofA's analysis highlights, the long-term demand trajectory remains robust, driven by data center expansion and the shift towards accelerated computing.

Investors are watching closely, with many seeing this as a buying opportunity. "The market tends to overreact to margin noise," noted one portfolio manager. "Nvidia's secular tailwinds are too strong to ignore."

Looking Ahead

As Nvidia navigates the challenges of rising memory costs and an aggressive product roadmap, the company's ability to execute will be crucial. With BofA's endorsement, the Street's focus is squarely on the AI giant's next moves. The question remains whether Nvidia can maintain its torrid pace without sacrificing too much profitability.

For now, the sentiment is overwhelmingly positive, with Nvidia's stock poised to benefit from the continued AI-driven revenue growth. The coming quarters will be telling, as the Rubin ramp and margin trajectories unfold.

Correction: An earlier version of this article incorrectly stated BofA's price target as $350. The correct price target remains $350.