12:05 PM EDT, 05/17/2024 (MT Newswires) -- Nvidia ( NVDA ) is expected to deliver strong fiscal Q1 financial results compared with consensus estimates but the stock could be "volatile near-term," BofA Securities said in a note Friday.

The brokerage cited four factors that could enhance volatility, including deceleration for the July quarter ahead of Blackwell, with sequential sales growth projected at 7% to 8%. However, a "solid Blackwell launch plus compelling valuation" would support the stock longer term, according to the note.

Other factors contributing to potential volatility are heightened China restriction risks in H2 with the start of H20 shipments, less upside on inference metric, and move to more normalized gross margins, BofA Securities said.

Nvidia ( NVDA ) is scheduled to report its fiscal Q1 financial results on May 22.

BofA analysts expect Nvidia's ( NVDA ) fiscal Q1 sales to reach $26 billion compared with the consensus of $24.6 billion. Gross margins are anticipated to peak at 77% in Q1, and decline to 75% to 76% in Q2, the brokerage said.

"[Gross margins] peaking and decline is a sign of pricing pressure, unfavorable mix [more China H20 shipments and/or more inference units] and slowing demand/easing supply," BofA said in the note.

BofA maintained a buy rating on Nvidia's ( NVDA ) stock with a price target of $1,100.

Nvidia's ( NVDA ) shares were down 0.9% in recent Friday trading.

Price: 934.87, Change: -8.72, Percent Change: -0.92