Bank of America Bullish on Nvidia Despite AI Chip Export Concerns

Buying Nvidia right now is a 'particularly attractive opportunity,' Bank of America says

There is an end in sight to Nvidia' s recent rough patch, and that means now could be a plum buying opportunity for shares of the artificial intelligence darling, according to Bank of America. "[W]e believe the stock is providing a particularly attractive opportunity for one of the most unique, high-quality tech franchises leading the largest and fastest growing secular trends," analyst Vivek Arya wrote in a Wednesday note. The firm's buy rating and $200 per share price target imply nearly 76% upside from Wednesday's close. Shares have pulled slipped more than 15% so far in 2025. March has been especially difficult for Nvidia, which is off nearly 9% during the period as jittery investors shy away from last year's Big Tech high flyers. NVDA YTD mountain Nvidia stock in 2025. One of the major near-term headwinds lingering over Nvidia stock is the May 15 compliance deadline for the AI diffusion rule. The framework, first introduced in the final days of the Biden administration, is meant to control global AI development by limiting the export of chips from companies such as Nvidia to an approved list of countries. An industry group representing firms such as Amazon, Meta Platforms and Microsoft has urged President Donald Trump to loosen some of the rules before the deadline. However, the effect that the still unknown final ruleset has had on Nvidia stock may have been overblown, Bank of America's Arya said. He expects the stock to rebound sharply once some clarity is provided by the Trump administration. "Once the geopolitical concerns are sized and priced, we expect NVDA to recover, much like the relative recovery we have seen in semicap stocks this year once China exposure was reflected in wafer fab [wafer fabrication] equipment spending," he said. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today's dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You'll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!

Buy Nvidia shares as valuation is 'still compelling', Bank of America says By Investing.com

Investing.com -- Bank of America (NYSE:BAC) reaffirmed its Buy rating on Nvidia (NASDAQ:NVDA) shares, stressing that the chipmaker's valuation is "still compelling" despite growing geopolitical risks. The U.S. government's "AI Diffusion Rules," introduced in January to control the distribution of AI chips outside a core group of 18 countries, could affect Nvidia's earnings and lead to volatility in the tech giant's stock price until the effects become clearer on May 15, referred to as "Liberation Day." Despite this, BofA analysts maintain a positive outlook, highlighting that the current price-to-earnings (PE) ratio projections for calendar year 2026 -- ranging from 20x in a bull-case scenario to 26x in a bear-case scenario -- are still below Nvidia's historical average of 36x PE multiple. This valuation is also considered attractive when compared to large-cap peers, especially considering Nvidia's superior growth. "Once the geopolitical concerns are sized and priced, we expect NVDA to recover, much like the relative recovery we have seen in semicap stocks this year once China exposure was reflected in wafer fab equipment spending," analysts led by Vivek Arya wrote. "Meanwhile, we believe the stock is providing a particularly attractive opportunity for one of the most unique, high-quality tech franchises leading the largest and fastest growing secular trends," they added. BofA estimates that Nvidia has approximately 10% direct exposure to China's data-center market, with the remainder of sales in less restricted sectors such as gaming, automotive, and workstations. The impact of the AI Diffusion Rules could result in an additional 0%-10% sales headwind. However, this could be partially offset by increased AI demand from U.S. hyperscalers and other eligible entities. Even under the most severe restrictions, the bank sees potential earnings per share (EPS) for calendar year 2026 estimated between $4.40 and $5.05, which translates to an attractive implied PE ratio of 22.5x-26x. The bank also points to other catalysts that may support Nvidia's stock performance, including an expected recovery in gross margins (GM) in the second half of the year as the company ramps up its new B300 Blackwell Ultra. Nvidia's GMs are currently at 71%, below the 75-76% expected for fiscal year 2026/calendar year 2025, a year ago. This margin pressure has also limited upward EPS revisions. However, following recent management meetings at the GTC conference, there is confidence that GMs will recover towards the mid-70s with the new product launch.