Investors are eagerly awaiting semiconductor giant Nvidia’s (NVDA) fiscal first-quarter earnings on Wednesday, May 20. Ahead of Q1 FY27 earnings, top Bank of America analyst Vivek Arya reiterated a Buy rating on Nvidia stock with a price target of $320, calling it a top pick. Let’s discuss Arya’s expectations from the upcoming earnings.
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NVDS: built for a short position on NVDAMeanwhile, Wall Street expects Nvidia to report EPS (earnings per share) of $1.75, reflecting 116% year-over-year growth. Revenue is estimated to rise 79% to $78.85 billion.
Top Analyst Highlights Key Expectations from NVDA’s Q1 Earnings
Arya expects Nvidia to deliver the “usual historical” sales beat of 2% to 4% or $2 billion to $4 billion compared to current sell-side expectations. Beyond the key headline metrics, the 5-star analyst expects focus to be on the following aspects:
- Potential for enhanced cash returns
- Vera Rubin ramp timing
- Ability to sustain strong gross margin (about 75% amid persistent rise in memory and other costs)
- Update to the $1 trillion contribution estimate for 2025 to 2027, with details on contribution from LPU racks, CPU, and Vera Rubin Ultra and other products not included before.
- Impact of competition from Google’s (GOOGL) tensor processing units (TPUs), agentic CPU, and other ASICs.
Overall, Arya remains bullish on Nvidia, given its dominance in the fastest-growing tech market and the stock’s attractive valuation at a P/E below 20x 2027 earnings estimate or only 0.4x PEG (price/earnings to growth) relative to more than 46% CAGR (compound annual growth rate) in 2025-2028 EPS.
As discussed in his recent investor note, Arya pointed out that Nvidia’s large market position and high fund ownership (it constitutes 8.3% of the S&P 500 Index (SPX) and about 78% active fund manager ownership) often pose challenges. Notably, other large-cap tech stocks in the same position have added incremental investors by enhancing cash returns and appealing to dividend investors. Specifically, Nvidia has allocated 47% of free cash flow (FCF) from 2022-2025 to dividends and buybacks compared to peers returning around 80% of FCF. Arya believes that higher shareholder returns could attract more investors, narrow the valuation gap, and ease concerns around circular financing.
Interestingly, Arya ranks No. 94 among more than 12,200 analysts on TipRanks. He has a success rate of 64%, with an average return per rating of 27% over a one-year period.
Is NVDA a Good Stock to Buy?
Overall, Wall Street is bullish on Nvidia stock, with a Strong Buy consensus rating based on 40 Buys, one Hold, and one Sell. The average NVDA stock price target of $281.97 indicates about 27% upside potential. NVDA stock has risen 19% year-to-date.
