The valuation bargain of AI chip leader Nvidia has been targeted by top-tier investment banks! In its latest bullish research note, Bank of America says the market has exaggerated Nvidia’s operating risks, causing the stock price to be significantly undervalued. The maximum discount space is as high as 50%, and this is the ideal window for a high-quality entry.
Bank of America analyst Vivek Arya conducted in-depth calculations using a free-cash-flow-based sum-of-the-parts valuation method and reached the core conclusion: even after fully factoring in the financing risks brought by Nvidia’s business expansion, there is still a substantial 34%-50% discount versus its intrinsic value relative to the company’s current share price.
The analyst said bluntly that the market is clearly misjudging risk. Investors are overly worried about potential pitfalls in Nvidia’s development, while overlooking the company’s core growth value. This emotional bias has created a highly cost-effective investment opportunity for Nvidia.
On the market front, Nvidia has recently pulled back along with the broader AI sector. On Tuesday, the stock fell slightly by 2.3%, closing at $219.74. Although the stock is up about 18% year-to-date, compared with the phase high set in May, it is still down more than 7%. Valuation has therefore been moving back toward a more reasonable range.
On the fundamentals, Nvidia’s AI ecosystem expansion is still being intensified, with strong growth momentum. The company recently announced a major investment plan to spend no more than $105 billion to build a large new data center campus in Ohio, further consolidating its leadership moat in the global AI compute market.
In response to market concerns, Bank of America also provided a clear optimization path. The bank said the most effective way for Nvidia to ease market anxiety and repair its valuation is to allocate more free cash flow to share buybacks—by enhancing shareholders’ cash returns, strengthening market confidence, and driving valuation to recover.
Based on strong growth expectations and the potential for valuation repair, Bank of America officially assigned Nvidia a “Buy” rating and set a target price of $350, implying a meaningful upside from the current share price.$NVDA.US
Bank of America analyst Vivek Arya conducted in-depth calculations using a free-cash-flow-based sum-of-the-parts valuation method and reached the core conclusion: even after fully factoring in the financing risks brought by Nvidia’s business expansion, there is still a substantial 34%-50% discount versus its intrinsic value relative to the company’s current share price.
The analyst said bluntly that the market is clearly misjudging risk. Investors are overly worried about potential pitfalls in Nvidia’s development, while overlooking the company’s core growth value. This emotional bias has created a highly cost-effective investment opportunity for Nvidia.
On the market front, Nvidia has recently pulled back along with the broader AI sector. On Tuesday, the stock fell slightly by 2.3%, closing at $219.74. Although the stock is up about 18% year-to-date, compared with the phase high set in May, it is still down more than 7%. Valuation has therefore been moving back toward a more reasonable range.
On the fundamentals, Nvidia’s AI ecosystem expansion is still being intensified, with strong growth momentum. The company recently announced a major investment plan to spend no more than $105 billion to build a large new data center campus in Ohio, further consolidating its leadership moat in the global AI compute market.
In response to market concerns, Bank of America also provided a clear optimization path. The bank said the most effective way for Nvidia to ease market anxiety and repair its valuation is to allocate more free cash flow to share buybacks—by enhancing shareholders’ cash returns, strengthening market confidence, and driving valuation to recover.
Based on strong growth expectations and the potential for valuation repair, Bank of America officially assigned Nvidia a “Buy” rating and set a target price of $350, implying a meaningful upside from the current share price.$NVDA.US