Bank of America has disclosed its preferred equities in the AI compute segment, placing NVIDIA Corporation at the top of its list, followed by Broadcom Inc and Advanced Micro Devices, Inc. The investment bank supplied explicit price objectives and the valuation metrics underpinning those targets, while also outlining the principal risks that could undermine each company’s outlook.
How the bank set its targets
Each price target is anchored to a multiple of the firm’s calendar year 2027 earnings expectations. For NVIDIA, Bank of America applied a 28 times multiple to its 2027 estimated price-to-earnings ratio excluding cash to reach a $300 objective. Broadcom’s $450 target reflects a 26 times multiple on 2027 estimated earnings, and AMD’s $280 target is based on 27 times its 2027 estimated non-GAAP EPS. The bank also compared these implied valuations to each company’s historical forward PE ranges when assessing relative fairness.
NVIDIA Corporation (NASDAQ: NVDA)
Bank of America’s $300 price objective for NVIDIA uses a 28 times calendar 2027 estimated PE excluding cash, a level that sits within the company’s historical forward PE band of 25 times to 56 times. The bank justified the multiple by pointing to NVIDIA’s leading market share across fast-growing AI compute and networking markets, which has supported its premium valuation.
But the bank also flagged multiple offsetting concerns. These include lumpiness in global AI project spending, cyclicality in the gaming market, and issues related to power access. The firm listed specific downside scenarios: softer consumer-driven gaming demand, elevated competition from other public companies and internal cloud projects, a larger-than-expected impact from China shipment restrictions, volatility in new enterprise and data center sales, the potential for slower capital returns, and increased government scrutiny of NVIDIA’s dominant position in AI chips.
Recent developments noted alongside the firm’s assessment include Cantor Fitzgerald reiterating an Overweight rating with a $300 price target after NVIDIA’s GTC conference, and a financing move by a European AI firm that raised $830 million in debt to acquire thousands of NVIDIA chips for a new data center.
Broadcom Inc (NASDAQ: AVGO)
Bank of America set a $450 objective for Broadcom using a 26 times multiple on 2027 estimated PE. That multiple lies roughly in the middle of Broadcom’s historical forward PE range of 11 times to 41 times and is consistent with a 1 times to 2 times PEG framework that the bank applies for high-growth compute vendors.
The bank supported Broadcom’s valuation on the basis of expected double-digit EPS growth alongside what it described as best-in-class profitability within semiconductors, strong free cash flow generation, and robust returns. The firm also highlighted exposure that could weigh on the stock: semiconductor cycle sensitivity tied to shifts in the AI theme, high revenue concentration with major customers such as Apple and Google with attendant design-out risk, competitive pressure in networking including rising NVIDIA competition, frequent asset acquisitions that raise integration and financial risk, and a substantial $60 billion net debt position.
Operational items cited in the analysis include Broadcom’s win, together with partner Carahsoft, of a five-year, $970 million contract with the Defense Information Systems Agency to consolidate software contracts, and the start of volume shipments of its Tomahawk 6 switch chip series.
Advanced Micro Devices, Inc (NASDAQ: AMD)
Bank of America assigned AMD a $280 price objective based on 27 times its 2027 estimated non-GAAP EPS. That valuation multiple is positioned toward the middle of AMD’s historical forward PE range of 13 times to 58 times. The bank framed the rating around continued AI-driven growth and gains in CPU share, tempered by expectations for slower expansion in cyclically sensitive embedded and game console markets.
Listed downside risks for AMD include execution risk on its first rack-scale MI400 Series product, uncertainty around the timing and size of AI projects in the Middle East, uneven consumer and enterprise spending patterns, reliance on a single outsourced manufacturing partner, and the maturity of the current video game console cycle.
The bank’s write-up referenced AMD’s announced collaboration with Celestica to develop a new rack-scale AI platform, as well as reiterated Buy and Outperform ratings from Aletheia Capital and Wolfe Research, which the bank said reflected analyst confidence in AMD’s AI accelerator development roadmap.
What this means for markets and investors
Bank of America’s selections map directly to pockets of capital spending on AI infrastructure, where demand for specialized compute and networking hardware has been a primary driver. The bank’s valuations and detailed downside casework underscore the sensitivity of these names to both cyclicality in adjacent end markets and to geopolitical and regulatory developments that could affect supply or market access.
Methodology note
The bank’s targets rely on forward-looking multiples applied to calendar year 2027 earnings estimates and compare those multiples to each company’s historical forward PE range. The analysis lists company-specific recent developments and partner actions that inform the near-term operational outlook.