Bank of America doubles down on Nvidia stock

Nvidia reported earnings on Aug. 26. Wall Street expected it to beat. Bank of America was not particularly interested in that part of the story.

The firm's note, published ahead of the report, was really about one thing: whether the market had correctly priced the scale of what Nvidia has been doing with its balance sheet.

The answer, according to Bank of America, was no. The results Nvidia delivered made that argument harder to dismiss.

Bank of America's Buy rating and $350 Nvidia price target

In a note shared with TheStreet on Aug. 25, analyst Vivek Arya reiterated a Buy rating and a $350 price target on Nvidia, implying roughly 64% upside from where the stock was trading that day.

The note's title says everything about where the firm directed investor attention: "Balance sheet disclosures could speak louder than EPS beat."

Nvidia delivered revenue of $96.2 billion for the second fiscal quarter, up 106% year over year and well above consensus expectations of roughly $92 billion, according to Nvidia's official earnings release . Data center revenue came in at $89 billion, up 117% year over year. Gross margin held at 75%.

"AI has reached its inflection point. It's doing useful work. Its tokens are productive and profitable. Now, compute is revenue," Jensen Huang said on the earnings call. "And demand is accelerating."

Nvidia also returned roughly $26 billion to shareholders in the quarter through buybacks and dividends, with approximately $99 billion remaining under its buyback authorization.

What the market had not priced properly, Bank of America argued, was the scale of what Nvidia had committed financially to keep the AI ecosystem running.

Nvidia's $300 billion AI capital commitments and balance sheet risk

Nvidia is no longer just selling chips. It is increasingly financing the companies that buy them.

Bank of America estimated total capital commitments of approximately $300 billion, split between roughly $70 billion in direct equity investments and roughly $230 billion in residual value guarantees and backstops.

The equity side covers much of the AI supply chain, according to CNBC . The largest single check was $30 billion for OpenAI. Beyond that, Nvidia has invested in Anthropic, Safe Superintelligence, Intel, CoreWeave, Nebius, Lumentum, Coherent, Marvell, Synopsys, Nokia, Corning, and others.