03:39 PM EDT, 05/23/2024 (MT Newswires) -- Nvidia (NVDA) likely has the potential to achieve annual earnings in excess of $50 a share within two years amid faster adoption of its recently launched Blackwell platform, BofA Securities said in a note e-mailed Thursday.

The chipmaker late Wednesday logged fiscal first-quarter results that topped Wall Street's estimates as demand for generative artificial intelligence drove record data-center revenue. The next-generation Blackwell AI factory platform, which was launched in March, is in full production, Chief Financial Officer Colette Kress said on an earnings conference call, according to a Capital IQ transcript.

"Blackwell is a giant leap with up to 25x lower (total cost of ownership) and energy consumption than Hopper," Kress told analysts late Wednesday. "Demand for H200 and Blackwell is well ahead of supply, and we expect demand may exceed supply well into next year."

Hopper is Nvidia's ( NVDA ) graphics processing unit computing platform used for the training of large language models and generative AI applications.

BofA said it now sees the potential for Nvidia's ( NVDA ) annual EPS to top $50 in two years, compared with a prior outlook of more than $35, on the back of a faster Blackwell adoption. The company is consistently executing plans and ensuring "smooth transition" to the Blackwell platform, BofA analyst Vivek Arya said.

The brokerage raised its price objective on the Nvidia stock to $1,320 from $1,100 while reiterating its buy rating. The company's shares were up 9% in Thursday late-afternoon trade.

Nvidia's ( NVDA ) fiscal first-quarter adjusted EPS surged to $6.12 from $1.09 a year earlier, while revenue more than tripled to $26.04 billion. Data-center revenue surged 427% year-over-year to $22.6 billion.

"(Nvidia) is not just growing sales faster than any other mega-cap, but also generating over 57% (free cash flow) margin," Arya said. "At this pace, (Nvidia) could generate over ($120 billion) in FCF in the next two years and over ($200 billion) in FCF in the next three years, creating strong growth optionality." The company's growth in operating expenses can help sustain its "strong" position among competitors, the analyst said.

Nvidia's turnkey system design can help it sustain a market share of more than 80% in the AI accelerator market that could double on an annual basis to roughly $100 billion this year before doubling again by 2027 and then cross $300 billion by 2030, according to the note.

BofA increased its pro-forma EPS outlook for Nvidia to $25.76 from $23.11 for fiscal 2025 and to $35.90 from $29.59 for fiscal 2026. Its projection for fiscal 2027 went up to $44.37 from $36.56 previously.

Unless the company can supplement hardware sales with a growing software pipeline, its gross margin of about 75% and earnings before interest and taxes margins of 65% could mark the peak for this cycle, the brokerage said. "Second, the transition to Blackwell will require changes to data center for power/cooling etc., which could create lumpiness in quarterly execution for a very well-held stock."

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