BofA: NvidiaQ2 Earnings ExpectationsQ2 Sales Estim

BofA: Nvidia

Q2 Earnings Expectations

Q2 Sales Estimates: BofA expects a $3B–$4B beat, projecting $94B–$95B in sales (compared to the company's guidance of $91B).

Guidance Raise: Anticipates a 3%–4% raise for Q3 guidance to $107B–$108B, driven by the rollout of next-generation Vera Rubin shipments, new Vera CPU ramps, and robust cloud capital expenditure trends.

Memory Cost Inflation & Margins

Gross Margin Resilience: Despite rising memory pressures, NVIDIA's gross margins (GM) are expected to hold steady at a healthy ~73–74% over time (compared to ~75% currently).

Compute Racks Impact: The upcoming Vera Rubin generation will see a minimal ~60bps gross margin headwind on compute racks (total DRAM at ~12.7% of rack price) compared to Blackwell Ultra (~12.1%).

Offsets: Potential cost inflation is expected to be offset by NVIDIA's preferential sourcing through long-term agreements (LTAs), strong ties with memory vendors like SK Hynix, dynamic pricing power, and near-record GPU rental prices.

Ecosystem Partner Financing & Free Cash Flow

Manageable Commitments: Direct equity investments into ecosystem partners total roughly $70 billion to date (including $30 billion in OpenAI, up to $10 billion in Anthropic, and $5 billion in Safe Superintelligence).

Free Cash Flow (FCF) Coverage: This $70 billion commitment represents only ~15% of NVIDIA's projected $470 billion in FCF generation over the next two years (CY26–27E), leaving ample room to maintain its 50% FCF shareholder return pledge.

OpenAI/SB Energy Backstop: A potential $250 billion backstop for OpenAI's Ohio campus lease is a back-end-loaded (2028–30+) contingent guarantee, triggered only in the event of an OpenAI default.

GPU Rental Prices

Near-Peak Valuations: Rental prices for flagship NVIDIA GPUs (A100, H100, and B200) are holding firm near their historical highs as of August 2026.

Blackwell (B200) Leadership: The B200 commands the highest hourly rate in the index, trading steadily at $5.66/hr following a sharp upward re-rating earlier in the spring.

Hopper (H100) Stability: The H100 index sits at $2.80/hr, demonstrating steady upward momentum and persistent demand for mainstream AI training infrastructure.

Ampere (A100) Resilience: The legacy A100 remains locked near its multi-month peak at $1.64/hr, underscoring sustained utilization even for older-generation compute tiers.

$NVIDIA(NVDA.US)