STOCKS | Bank of America Says Nvidia’s Underperformance Has Created a More Attractive Buying Opportunity

Nvidia’s share price has lagged the broader semiconductor sector so far this year, and Bank of America said this should be viewed as a more attractive buying opportunity rather than a risk warning. According to Jin10, analyst Vivek Arya said there are factors that have worried investors, but he argued the market reaction has been excessive. Arya said rising costs for HBM components have fueled concerns about gross margins. He said investors have overstated this pressure while understating Nvidia’s pricing power, scale advantages, and about $119 billion in supply-chain commitments. He said Nvidia is expected to offset higher HBM costs because pricing for the next-generation Rubin platform may be meaningfully higher than the current Blackwell product lineup, which he said could keep gross margin in the mid-70% range. Arya said the second-largest investor concern is competition from custom chips, citing Google’s TPU co-designed with Broadcom. He said this concern is also exaggerated, noting that Google’s TPU has existed for more than a decade and that during that period Nvidia’s GPU revenue increased 700-fold. Over the long term, Arya said Nvidia is expected to account for 65% to 70% of hyperscale cloud providers’ AI infrastructure spending. He also said Nvidia’s forward price-to-earnings ratio is about 18.69 times, near half of its average over the past 10 years and close to an 11-year low.