Investing.com -- Bank of America (BofA) maintained a Buy rating on Nvidia (NASDAQ: NVDA ) stock, reiterating the technology giant as a top pick ahead of its fiscal Q4 2025 report due on February 26.

BofA analysts expect Nvidia to report a modest beat or align with sales guidance and a lower gross margin in the first quarter of 2025 due to the transition to the Blackwell product and restrictions in China.

However, the analysts believe the earnings call could represent the lowest point in investor sentiment, as Nvidia is expected to reassure on Blackwell execution and signal confidence in fiscal year 2026 and calendar year 2025 with a forecast for data center sales growth exceeding 60% year-over-year.

Moreover, BofA also expects the earnings call to spark excitement ahead of the next GTC conference, scheduled for March 17, where attention will turn to a strong pipeline, including GB300 and Rubin, as well as advancements in physical AI and robotics.

BofA analysts highlighted Nvidia's strong position in the compute sector, driven by four key forces: training towards artificial general intelligence (AGI), derivative model training, increasing AI inference requirements, and infrastructure upgrades.

“While the mix between the 4 drivers could evolve, we see the overall pie growing over time,” analysts led by Vivek Arya wrote in a note.

“From CY18-24, performance (in FLOPS) for NVDA processors went up by 1000x, yet its data center sales also went up by 300x, so one didn’t cannibalize but instead grew the other. Optimizations in hardware and software are key parts of computing,” they added.

Analysts also pointed out there has been no impact on spending intentions among Nvidia’s major customers, including Microsoft (NASDAQ: MSFT ) and Meta (NASDAQ: META ), despite DeepSeek’s supposed breakthrough optimizations.

Further, BofA’s report addressed geopolitical concerns, acknowledging Nvidia's exposure to trade tensions and policy changes. However, the bank expects the demand from Western markets to counterbalance any negative impact from China.

The recent one-month reprieve granted to Canada and Mexico by the Trump administration was cited as an indication of a potential for negotiation over trade restrictions.

Lastly, BofA compared Nvidia's graphics processing units (GPUs) with application-specific integrated circuits (ASICs), suggesting that GPUs are better suited to address the dynamic requirements of large language models (LLMs).

While both GPUs and ASICs are benefiting from the rising demand for AI compute and networking, Nvidia's consistent hardware and software co-optimization and its strong enterprise presence are likely to maintain its dominant position in the market.

Nvidia's stock is currently trading at an attractive price-earnings (P/E) ratio of approximately 26 times the calendar year 2025 estimates, which is at the lower end of its historical range.