Bank of America reiterates buy rating for Nvidia stock

Nvidia (NVDA) has evolved so much over the years. It started as a video game chipmaker. It invented the term Graphics Processing Unit (GPU). Used the crypto boom to its advantage. And it is now the king of AI, thanks to its CUDA software moat.

Along with GPUs and CPUs, an important part of its hardware portfolio is its networking stack.

The company revenues can be divided by the end market as follows:

• Data Center
• Gaming
• Professional Visualization
• Automotive
• OEM and Other

What is striking is that more than 89% of revenue comes from data centers. We can see that from the company's FORM 10-K. It shows that in fiscal year 2026, data center revenue hit $193.7 billion, while the total revenue was $215.9 billion.

Nvidia stock is up about 3% at the time of writing, Monday afternoon, April 27, trading near $214, according to Yahoo Finance. That means Nvidia has achieved a new record market cap of $5.209 trillion. It is also a complete recovery after the stock took a dip following the earnings report.

Several key news items contributed to the stock rally in the past month.

Key news for Nvidia stock

Nvidia ended March on a high note.

It used the GPU Technology Conference (GTC) to unveil the Nvidia Groq 3 LPX accelerator. Nvidia licensed Groq technology in December 2025, so the chip must have been nearly complete before the deal was made. The company managed to outrun competitors by launching its AI inference racks.

It teamed up and invested $2 billion into Marvell (MRVL). This was of huge importance for Nvidia's networking stack. The deal signaled that the company seeks to come out on top in silicon photonics development.

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We can infer that from the company's earlier investment of $2 billion in Lumentum Holdings (LITE) and another $2 billion in Coherent Corp. (COHR). Both companies and Marvell, of course, are working on silicon photonics technologies.

A huge vote of confidence for pretty much the whole semiconductor sector was Intel's earnings.

Bank of America says "boosting cash returns could be another rerating catalyst" for Nvidia

In a research note shared with me, Bank of America analyst Vivek Arya and his team updated their opinion on Nvidia stock.

The team said that with most AI ecosystem investments likely complete, the company could pivot toward shareholder returns.

Analysts said Nvidia can generate more than $400 billion of free cash flow (FCF) across 2026 and 2027, which is approximately equivalent to Apple and Microsoft combined, noting that it trades at a 30% lower market cap/FCF multiple. The team believes this is because investors remain uncertain about the sustainability of the growth.

"Increased cash returns could signal sustainability, widen the shareholder base, and help narrow the valuation gap," Arya wrote.

Analysts noted two additional headwinds for the stock:

• Nvidia represents approximately 8.3% of the S&P 500.
• Competition is rising from AMD and ASIC (Broadcom, Google, Amazon AWS) chips.

The team expects Nvidia to keep 70% or more of the AI value share.

Analysts estimate that over the last three years, Nvidia's FCF returns have averaged only 47%, versus approximately 80% for peers. Further, this is below Nvidia's own 82% average over the period from 2013 to 2022.

Related: Bank of America resets Intel stock price target after earnings

They said the company could consider boosting its dividend yield from 0.02% to 0.5% to 1%, in line with Apple's 0.4% and Microsoft's 0.8%. The team estimates that a higher yield would only require $26 billion to $51 billion, or 15% to 30% of 2026 estimates and 11% to 21% of 2027 total FCF generation, leaving enough cash for buybacks and ecosystem investments.

Arya reiterated a buy rating for Nvidia stock and the price target of $300, based on 28 multiple of his estimate for price-to-earnings ratio excluding cash for calendar year 2027, which is within Nvidia's historical forward year P/E range of 25 to 56.

Analysts noted downside risks for Nvidia:

• Weakness in the consumer-driven gaming market
• Competition with major public firms
• Larger-than-expected impact from restrictions on compute shipments to China
• Lumpy and unpredictable sales in new enterprise, data center, and auto markets
• Potential for decelerating capital returns
• Enhanced government scrutiny of Nvidia's dominant market position in AI chips

Related: Bank of America resets Google stock forecast ahead of earnings

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This story was originally published April 27, 2026 at 8:17 PM.