Bank of America resets Nvidia stock forecast before earnings

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Nvidia stock saw a small gain on Friday, closing at $190.17, up 1.77% from the previous day. Despite this increase, the stock is still about 8% lower than its peak on October 29, when it closed at $207.04.

There has been growing skepticism surrounding artificial intelligence, which has put pressure on Nvidia. Investors are eagerly awaiting the company’s Q3 earnings report, which is scheduled to be released on November 19.

In addition to the overall increase in AI skepticism, there have been some negative developments for Nvidia. Hedge fund manager Michael Burry, known for his role in “The Big Short,” announced that he is shorting Nvidia and Palantir. Furthermore, SoftBank Group revealed that it has sold all of its Nvidia shares, worth $5.8 billion, and is now focusing on an “all-in” bet on OpenAI.

Adding to the challenges, Burry raised concerns about AI hyperscalers artificially inflating earnings. Bank of America analyst Vivek Arya and his team have revised their forecast for Nvidia’s revenue and earnings per share in response to these developments.

Despite these challenges, analysts believe that Nvidia is well-positioned in the AI space. The company is the only merchant chip supplier with proven full-stack, rack-scale execution in large AI clusters. By the second half of 2026, Nvidia will have three generations of chips (Blackwell, Blackwell Ultra, and Vera Rubin) with experience.

Cloud capital expenditures worries are expected to be seasonal and will likely be resolved in the new year when cloud customers provide their outlooks on capital expenditures.

Analysts have raised their non-GAAP EPS estimates for fiscal years 2026, 2027, and 2028 ahead of Q3 earnings. They have also increased their sales estimates for these years. Arya reiterated a buy rating and a target price of $275 based on his estimate for the price-to-earnings ratio for the calendar year 2027.

In conclusion, despite the challenges and skepticism surrounding AI, Nvidia remains a strong player in the industry with promising growth potential in the coming years.