Nvidia stock still 'top pick' at Bank of America ahead of Q2 earnings

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Nvidia stock is still a 'top pick' at Bank of America even after its stunning AI-driven 209% rally

remains a"top sector pick" ahead of its upcoming second-quarter earnings report, even after its stunning AI-driven year-to-date stock rally of 209%.Vivek Arya, who in a Monday note reiterated his"Buy" rating and $550 price target for Nvidia, suggesting potential upside of 22% from current levels.

"We expect the sentiment to be [a] bit more measured. Demand isn't the issue, its supply and importantly the pace with which US cloud service providers are able to set up genAI compute instances," Arya said. But perhaps most importantly, the near-term direction of Nvidia's stock price hinges on guidance comments from CEO Jensen Huang, and as to whether these revenue gains are a short-term blip or have staying power.

The post-earnings reaction to Nvidia's upcoming earnings report could ultimately see some"near-term stock consolidation" after its solid year-to-date rally. In other words, expect Nvidia stock to trade sideways or slightly lower after it reports earnings after the market close on August 23, according to Arya.is what Arya is focused on.

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