Nvidia CEO Jensen HuangDavid Zalubowski/AP
Nvidia stock has tumbled since it reported earnings last week.
Bank of America says the slide opens up an attractive buying opportunity.
The chip maker’s stock is trading near its lowest valuation in five years, the bank said.
Nvidia bulls may feel paralyzed by the sudden onslaught of headwinds blowing against the company, but to Bank of America, the move down in the stock price in the last week offers an attractive buying opportunity.
On Tuesday, shares of the semiconductor kingpin tanked, wrenching down its market value by $279 billion for the largest one-day decline in US corporate history.
The pullback came after the firm’s recent earnings report failed to meet the market’s most bullish expectations, adding to fears that the artificial intelligence rally may be losing steam.
The stock briefly continued its retreat on Wednesday, following a report that the firm received a subpoena from the Department of Justice. In all, the stock has fallen by as much as 15% since Nvidia released its second-quarter earnings in late August.
To Bank of America, the post-earnings skid marks a buying opportunity.
In a note released Thursday, the bank said that Nvidia is now hovering around its cheapest valuation in the past five years.
“While market forces could enhance near-term stock volatility, we continue to find NVDA valuation compelling at 27x CY25/FY26E consensus PE (or only ~20x PE at high-end of $5+ CY25 eps estimate),” analyst Vivek Arya wrote.
Compared to this, Nvidia price-to-earnings have ranged between the mid-20s to mid-60s over the past half-decade.
Investors who buy the stock now could be facing 54% upside, according to BofA’s price target of $165 per share.
This looks achievable, as Nvidia will remain a key beneficiary of AI investing and won’t always be pressured down by headwinds, the bank said. For instance, weak supply-side fundamentals should subside in the near term, the analysts noted.
While investors are disappointed by delays in the firm’s next-gen Blackwell chip, shipments should be confirmed over the next several weeks,…
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