Nvidia (NASDAQ:NVDA, ETR:NVD) remains compelling at its current valuation amid enhanced near-term stock volatility, analysts at Bank of America believe.
Analysts repeated their ‘Buy’ rating on Nvidia and a $165 price target. Nvidia shares traded hands at $107 on Thursday afternoon having shed about 10% this week on investors’ growth concerns.
Nvidia faces several headwinds, including fundamental challenges such as the delay of its Blackwell AI chips, regulatory such as a potential Department of Justice (DOJ) probe, and perceptional such as competition, AI monetization and cloud capital expenditures (capex).
These near-term headwinds present an especially attractive opportunity, the bank’s analysts believe, as the stock is trading at the lowest quartile of its five-year trading range.
“The key fundamental recovery catalyst will likely be supply chain data points over the next several weeks, confirming the readiness of new Blackwell product shipments,” they wrote.
A possible DOJ antitrust probe into Nvidia’s dominance in AI chips is not seen as having a material impact on Nvidia’s fundamental opportunity until there are more details, analysts added.
Key points to consider include that Nvidia’s cloud customers are highly capable of sourcing chips from various vendors, including their own custom ASICs, and that AI chip demand far exceeds supply, with Nvidia projecting quarterly growth despite Blackwell delays driven by its Hopper products.
Skepticism around AI capex and monetization is seen as “an understandable but fruitless endeavour” until at least 2026.
“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,” analysts believe.
“The tech industry will give itself at least another one to two years of intense buildout of Nvidia Blackwell chip with its 4x lift in AI training and 25x+ lift in inference.”
The first wave of large language models (LLMs) using Nvidia’s Hopper was “just the teaser,” Bank of America wrote.
“The industry's real capability will only come out with next-gen LLM (OpenAI GPT-5, Meta's Llama 4 etc.) with enhanced reasoning, intuition, reliability, multi-modal capabilities, and ability to create autonomous AI agents for managing real-world tasks,” they wrote.
“Recall the AI/LLM race is not just between established cloud vendors, it's also against them versus nimble start-ups including OpenAI, Coreweave, Anthropic, Perplexity and others (Tesla xAI).”