Bank of America analyst Vivek Arya said the market may be overstating the risks tied to the artificial intelligence investment cycle, leaving Nvidia undervalued by 34% to 50%. In his latest research note, Arya reaffirmed a Buy rating on Nvidia and kept his $350 price target unchanged, arguing that the stock still has substantial upside from current levels based on that target.
The call comes as AI-related stocks have been under pressure, with investors focused on a possible slowdown in AI infrastructure spending, the pace of enterprise AI commercialization, and valuation concerns. Bank of America’s view is that those risks are already being priced too aggressively by the market. Arya said Nvidia remains at the center of AI computing infrastructure, supported by its GPU lineup, software ecosystem, and partnerships with cloud providers. He added that concerns over the durability of the AI cycle may be obscuring the company’s longer-term growth potential. The bank has also previously pointed to Nvidia’s leading position in AI data centers, saying expanding generative AI use cases should keep demand for high-performance computing resources from enterprises and cloud service providers intact.
Bank of America analyst Vivek Arya said on Aug. 19 that the market may be overestimating the risks facing the artificial intelligence investment cycle, a view he said has left Nvidia undervalued by 34% to 50%.
In his latest research note, Arya reiterated a Buy rating on Nvidia and maintained a $350 price target. Based on that target, the stock still has significant upside from current levels.
BofA says AI risks are being priced too aggressively
AI-related stocks have come under pressure recently as investors worry about a slowdown in AI infrastructure spending, the pace of enterprise AI commercialization, and valuation pressure. Bank of America said the market has gone too far in pricing those risks.
Arya said Nvidia remains at the center of AI computing infrastructure. He pointed to the company’s GPU products, software ecosystem, and advantages in working with cloud providers as reasons it can continue to benefit from growing demand for AI computing power.
Long-term growth remains part of the thesis
Arya said current concerns about the durability of the AI cycle may be masking Nvidia’s long-term growth potential.
Bank of America has previously expressed optimism about Nvidia’s leading position in AI data centers. The bank has also said that as generative AI applications expand, demand from enterprises and cloud service providers for high-performance computing resources should continue to support Nvidia’s future earnings growth.
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