On Thursday, BofA Securities maintained its Buy rating and $190.00 price target on NVIDIA (NASDAQ:NVDA) stock, following the company's financial results for the third fiscal quarter of 2025, ending in October.
The semiconductor giant's outlook for the fourth quarter ending in January met expectations with a forecast of $37.5 billion in revenue, aligning closely with the consensus of $37 billion but falling short of some investors' higher expectations of around $40 billion.
The report indicated that NVIDIA's gross margin could initially decline to the low 70s percentage range due to the early ramp-up of their Blackwell architecture. However, it is expected to recover in the latter half of the year, reaching back into the mid-70s percentage range.
BofA Securities updated its estimates but maintained its above-consensus forecast for NVIDIA's fiscal year 2026 and calendar year 2025 earnings per share (EPS) at $4.47.
Despite the potential for the stock to experience short-term fluctuations as investors adjust to the tempered outlook, BofA Securities remains positive on NVIDIA.
The firm's stance is supported by several key factors: NVIDIA's leading position in transitioning $1 trillion of legacy infrastructure to accelerated computing systems, strong demand from various sectors, and the company's status as the fastest-growing mega-cap stock.
Notably, NVIDIA trades at 32 times its calendar year 2025 price-to-earnings (PE) ratio, which is only 0.6 times its projected EPS growth rate of over 50%. This is considered favorable compared to its large-cap peers in the 'Mag-7' group, which trade at a price-to-earnings growth (PEG) ratio of 2.2 times.
Furthermore, NVIDIA's robust free cash flow (FCF) generation is highlighted, with projections indicating that the company could generate over $200 billion across calendar years 2025 and 2026. This financial strength is expected to provide NVIDIA with significant resources for shareholder returns and organic investments.
In other recent news, NVIDIA Corporation (NASDAQ:NVDA) has been the focus of several analysts' reports due to its strong financial performance and strategic position in the AI industry.
Barclays (LON:BARC) has maintained an Overweight rating on NVIDIA stock and increased the price target to $160, citing the company's balanced guidance and the potential of its upcoming Blackwell technology. Jefferies has also maintained a Buy rating on NVIDIA with a price target of $185, highlighting the expected demand for Blackwell processors.
Furthermore, Wedbush Securities raised its price target for NVIDIA from $160 to $175, maintaining an Outperform rating, while Truist Securities increased its price target to $169, reaffirming a Buy rating on the stock. Piper Sandler confirmed its Overweight rating for NVIDIA with a consistent price target of $175.
These recent developments come after NVIDIA reported a record-breaking total revenue of $35.1 billion, a 94% increase from the previous year, largely due to robust demand for AI infrastructure. The company's data center revenues climbed to approximately $30.8 billion.
NVIDIA anticipates a Q4 revenue of $37.5 billion and expects a temporary dip in gross margins during the Blackwell product ramp, but projects a return to mid-70s margins shortly.
InvestingPro Insights
NVIDIA's recent financial performance and market position are further illuminated by data from InvestingPro. The company's market capitalization stands at an impressive $3.56 trillion, reflecting its dominant position in the semiconductor industry. NVIDIA's revenue growth has been nothing short of extraordinary, with a 194.69% increase over the last twelve months as of Q2 2025, reaching $96.31 billion. This aligns with BofA Securities' positive outlook on the company's growth trajectory.
InvestingPro Tips highlight NVIDIA's financial strength and market performance. The company boasts a perfect Piotroski Score of 9, indicating robust financial health. Additionally, NVIDIA has maintained dividend payments for 13 consecutive years, demonstrating a commitment to shareholder returns that complements its strong free cash flow generation mentioned in the article.
The data also shows NVIDIA's impressive profitability, with a gross profit margin of 75.98% over the last twelve months, supporting BofA Securities' discussion of the company's margin expectations. This high margin, coupled with the InvestingPro Tip noting "impressive gross profit margins," underscores NVIDIA's operational efficiency and pricing power in the market.
For investors seeking a deeper dive into NVIDIA's financial health and market prospects, InvestingPro offers 22 additional tips, providing a comprehensive analysis to inform investment decisions.
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