Bank of America Reaffirms Buy Rating on Nvidia

Bank of America reiterated its Buy rating on Nvidia (NASDAQ:NVDA), maintaining a price target of $165 on the stock, citing compelling growth at a compelling valuation.

Despite short-term challenges, BofA analysts view these hurdles as creating an attractive buying opportunity.

Challenges Ahead

Nvidia faces several near-term issues:
– Delays in its Blackwell product line.
– Regulatory scrutiny due to a potential DOJ antitrust investigation.
– Market challenges including weak seasonality and interest-rate concerns.

However, BofA emphasizes that these challenges could enhance the stock’s buying potential. The stock currently trades at about 27x its expected CY25 price-to-earnings (P/E) ratio, which is in the lowest quartile of its five-year range, making it particularly attractive at this level.

Positive Demand for AI Chips

Regarding the DOJ investigation, BofA notes that Nvidia’s AI chips are in high demand. Even with the delays in Blackwell, the company expects consistent growth due to the strength of its previous generation Hopper chips.

BofA also highlights that Nvidia’s products have consistently outperformed industry benchmarks, indicating that its dominance in AI is unlikely to diminish significantly.

Encouraging Future Prospects

BofA is positive about Nvidia’s AI prospects, particularly with the upcoming next-generation large language models (LLMs) such as OpenAI’s GPT-5 and Meta (NASDAQ:META)’s Llama 4. These new models, which are built on Nvidia’s chips, are expected to bring advancements in reasoning, reliability, and autonomy.

“AI capex is not just driving new business opportunities, it’s also critical in protecting existing moats and large profit pools in search, social, and enterprise workloads,” adds BofA.

Conclusion

BofA considers Nvidia a top pick in the tech sector, stating that the key fundamental recovery catalyst will likely be supply chain data points over the coming weeks, confirming the readiness of new Blackwell product shipments.