Nvidia (NASDAQ:NVDA) shares have lost some of their shine, falling 24% since reaching their all-time high in June, as headwinds have been building from multiple directions.
Delays with the Blackwell chips and pressure on gross margins are taking a toll, while regulatory concerns such as a potential DOJ probe over Nvidia’s dominance in the AI chip market have recently cropped up. Other factors like competition, AI monetization, as well as broader market issues such as weak September seasonality, interest rates, and elections, are also playing their part in depressing sentiment.
Considering these factors, Bank of America’s Vivek Arya, a 5-star analyst ranked in the top 1% of Street stock experts, believes they could “suppress the stock” in the short term. “However,” Arya goes on to say, “it could also potentially create an enhanced Buy opportunity with the stock ~27x CY25 PE within lowest quartile of valuation in past 5-years (median 36x PE). 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.”
Pertaining to the latter point, Arya thinks that doubts regarding AI capex and monetization are understandable but are a “fruitless endeavor” at least until 2026. AI capex is not only “driving new business opportunities” but is also essential for safeguarding “existing moats and large profit pools” in areas such as search, social media, and enterprise workloads (like chat and copilot functions). “The tech industry will give itself at least another 1-2 years of intense buildout of NVDA Blackwell chip with its 4x lift in AI training and 25x+ lift in inference,” the analyst opines.
Furthermore, the initial efforts with large language models (LLMs) making use of Nvidia’s Hopper GPU architecture were “just the teaser,” with Arya thinking the next-generation of LLMs like OpenAI’s GPT-5 and Meta’s Llama 4 are when the industry’s real capabilities will be on display.
All in all, Arya believes Nvidia’s current valuation presents an attractive opportunity, emphasizing that the stock has traded within a price-to-earnings range of the mid-20s to mid-60s over the past five years, with its current multiple being in the lowest quartile, which more than reflects the near-term uncertainties.
To this end, Arya rates NVDA shares a Buy, backed by a $165 price target. There’s a potential upside of ~60% from current levels. (To watch Arya’s track record, click here)
Among his peers, 38 analysts also rate Nvidia a Buy, while 4 remain on the sidelines with Hold ratings, making the consensus view a Strong Buy. The average price target stands at $151.79, suggesting a ~48% upside over the next year. (See Nvidia stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
