Nvidia’s (NVDA) shares may continue to be volatile until May 15, according to Bank of America. This is the date when new U.S. export rules for AI chips—referred to as the AI Diffusion Rule—officially take effect. These Biden-era regulations will try to limit the global spread of powerful AI chips by restricting their exports to countries that are outside of the 18 approved Tier 1 nations. Five-star analyst Vivek Arya noted in a client update that this uncertainty could cause continued stock volatility until what he dubbed “Liberation Day,” when the market begins to price in the rule’s actual impact.
Despite the short-term headwinds, Arya kept his Buy rating on Nvidia and maintained a $200 price target. One of the main concerns is Nvidia’s direct exposure to China, which accounts for about 10% of its business through its H20 GPUs—products that could be affected by the new restrictions. However, other parts of Nvidia’s business in China, such as gaming, automotive, and workstations, are less likely to be impacted by the policy change.
As a result, Arya remains optimistic about Nvidia’s long-term potential and thinks that once geopolitical concerns are better understood and factored in, the stock should bounce back. He emphasized that Nvidia still stands out as a high-quality tech company leading the way in several major growth areas, and he believes the current dip in the stock offers an attractive buying opportunity for investors.
Is NVDA a Good Stock to Buy?
Overall, analysts remain bullish on NVDA stock, with a Strong Buy consensus rating based on 39 Buys and three Holds assigned in the past three months. Furthermore, the average NVDA price target of $176.54 per share implies an upside potential of 55% from current levels.
