Nvidia’s 15% Stock Drop Creates Attractive Buying Opportunity, BofA Says

• Nvidia shares have fallen since reporting results last week.

• Bank of America believes this decline opens up an attractive buying opportunity.

• The chipmaker’s stock is trading near its lowest valuation in five years, the bank said.

Nvidia Bulls may feel paralyzed by the sudden onslaught of headwinds blowing against the company, but for Bank of America, the share price decline over the past week presents an attractive buying opportunity.

On Tuesday, shares of the semiconductor giant tankedreducing its market value by $279 billion to the biggest one-day drop in the history of American business.

The pullback came after the company’s recent earnings report failed to meet the most optimistic market expectationsadding to fears that the AI ​​rally is losing momentum.

The stock briefly continued its decline on Wednesday following a report that the company received a subpoena The stock has fallen 15% overall since Nvidia reported its second-quarter results in late August.

For Bank of America, the post-earnings drop represents a buying opportunity.

In a note released Thursday, the bank said Nvidia was now hovering around its lowest valuation in five years.

“While market forces may increase stock volatility in the near term, we continue to find NVDA’s valuation compelling at 27x CY25/FY26E PE consensus (or just ~20x PE at the high end of the $5+ CY25 EPS estimate),” wrote analyst Vivek Arya.

By comparison, Nvidia’s price-to-earnings ratio has hovered between the mid-20s and mid-60s over the past five years.

Investors who buy the stock now could face a 54% upside, according to BofA’s price target of $165 per share.

That goal appears achievable because Nvidia will remain a key beneficiary of AI investments and won’t always be under pressure from headwinds, the bank said. For example, weak supply-side fundamentals are expected to ease in the near term, analysts noted.

While investors are disappointed by delays in the release of the company’s next-generation Blackwell chips, shipments are expected to be confirmed in the coming weeks, BofA estimates.

In any case, the bank does not expect demand for previous-generation Hopper chips to disappear, given the strong demand for AI.

Regarding regulatory hurdles, Nvidia has since denied receiving a subpoena from the Justice Department.

Times of Update, who first reported the subpoena, later reported that the Justice Department has sent a request for a civil investigation, citing a source familiar with the matter.

While Bank of America does not see any impact from these developments, it noted that government lawsuits against major U.S. technology companies are not uncommon.

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Finally, skepticism about AI’s potential isn’t a problem, the bank said, at least through 2026. Those who fear that the wave of AI spending hasn’t yet yielded results just need to be patient, the analysts wrote.

“The tech industry will give itself at least 1-2 more years of intense development of the NVDA Blackwell chip with its 4x increase in AI training and 25+x increase in…