BofA says Nvidia’s 15 percent drop in stock value creates attractive buying opportunity

• Nvidia shares have fallen since it reported financial results last week.

• Bank of America says the decline creates an attractive buying opportunity.

• The bank said the value of the integrated circuit maker’s shares was approaching a five-year low.

Nvidia investors may feel paralyzed by the sudden onslaught of headwinds blowing against the stock, but for Bank of America, the stock’s decline over the past week presents an attractive buying opportunity.

The semiconductor giant’s shares fell sharply Tuesday, wiping out $279 billion in market value, the biggest single-day decline in U.S. corporate history.

The withdrawal came after the company’s latest earnings report fell short of the market’s most optimistic expectations, fueling concerns that the artificial intelligence rally may be running out of steam.

Shares continued their brief slide Wednesday after reports that the company had received a subpoena from the Justice Department. Overall, shares have fallen 15% since Nvidia reported its second-quarter results in late August.

For Bank of America, the decline in earnings presents a buying opportunity.

In a note published on Thursday, the bank said Nvidia’s share valuation is currently hovering around its lowest level in the past five years.

“While market forces could increase near-term stock volatility, we still believe NVDA is valued attractively at 27x FY25/2026 consensus P/E (or just ~20x P/E at the high end of FY25 EPS estimates and above $5),” analyst Vivek Arya wrote.

By comparison, Nvidia’s price-to-earnings ratio has fluctuated between the mid-20s and the mid-60s over the past half-century.

Investors who buy the stock now can expect a 54% upside, in line with BofA’s price target of $165 per share.

That looks achievable, as Nvidia will remain a key beneficiary of AI investments and will not always be pressured by headwinds, the bank said. For example, weak supply-side fundamentals should subside in the near term, analysts noted.

While investors are disappointed by delays in Blackwell’s next-generation processor, BofA estimates that deliveries should be confirmed in the next few weeks.

In any case, the bank doesn’t expect demand for previous-generation Hopper chips to disappear, given how much demand there is for AI.

As for regulatory hurdles, Nvidia has denied receiving a subpoena from the Justice Department.

Bloomberg, which first reported the subpoena, later reported that the Justice Department had sent a civil investigative request, citing a source close to the matter.

While BofA does not assume these events will have any impact, it noted that lawsuits against large U.S. technology companies are not uncommon.

Finally, skepticism about AI’s potential remains negligible, the bank said, at least until 2026. Those who fear that the wave of AI spending has not yet yielded results will simply have to be patient, the analysts wrote.

“The tech industry will give itself at least another 1-2 years of aggressive buildout of the NVDA Blackwell chip with its 4x increase in AI training and 25x increase in inference. Past efforts with the first wave of large language models (LLMs) using NVDA Hopper have been a teaser,” BofA wrote, predicting that the true AI capabilities will be unlocked by the upcoming LLMs.

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