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Bank of America's Senior Semiconductor Analyst, Vivek Arya, asserts that Nvidia's (NVDA) strong fundamentals will ultimately drive its stock higher, despite current volatility due to geopolitical concerns and potential export restrictions. Arya highlighted the success of NVDA's recent GTC conference, projecting a surge in data center spending and AI computing needs. Although NVDA shares have dropped 5.5% in the past month and 19% over three months, the analyst remains optimistic about the company's long-term prospects.
Bank of America analysts have identified three affordable stocks with "Buy" ratings: Credo Technology Group (CRDO), Skechers (SKX), and Hewlett Packard Enterprise (HPE). Credo has a price target of $75, suggesting a 52.5% upside from its recent closing price of $49.18. Skechers, despite a lowered target of $70 from $76, remains a strong buy at $57.35. HPE, with a target of $20 down from $26, is still considered a buy at $16.52.
Bank of America has maintained its Buy rating on Nvidia, citing a compelling valuation despite geopolitical risks and the impact of the U.S. government's AI Diffusion Rules. Analysts project a price-to-earnings ratio for 2026 between 20x and 26x, below Nvidia's historical average of 36x, and expect a recovery in gross margins as new products launch. With approximately 10% exposure to China's data-center market, Nvidia's earnings per share estimates for 2026 range from $4.40 to $5.05, indicating strong potential even under severe restrictions.
AppLovin Corporation (NASDAQ:APP) is gaining attention as a promising AI stock, with Bank of America recommending it as a buy due to its first-mover advantage and potential in digital spending. Despite challenges from short sellers, the company is viewed as a strong investment opportunity, ranking 7th among AI stocks on investors' radar. Meanwhile, Tencent has launched its T1 reasoning model, outperforming competitors in benchmarks and showcasing advancements in AI technology.
Nvidia's shares have declined 12% year-to-date, closing at $121.67, amid rising expenses and competition. The upcoming GPU Technology Conference, featuring CEO Jensen Huang, may shed light on the company's long-term strategy. Bank of America forecasts a recovery in gross margins to the mid-70% range in the latter half of fiscal 2025, despite challenges from U.S. export limitations impacting profits. With a dominant 80-85% market share in GPUs, Nvidia's future stock performance will hinge on its strategic direction and market response.
AMD's stock price fell 17% in 2024, contrasting sharply with Nvidia's 171% rise, despite AMD's strong earnings and innovation. Analysts cite AMD's lag in AI technology and the shift of major cloud players towards custom chips from competitors like Marvell and Broadcom as key challenges.
Nvidia's stock rose over 3% as analysts from Bernstein, TD Cowen, Morgan Stanley, and Truist maintained bullish ratings despite concerns about competition and potential declines in AI chip demand. Truist raised its price target to $204, citing Nvidia's technological superiority.However, worries persist as major tech companies like Google and Meta develop custom chips that could threaten Nvidia's market share. Analysts acknowledge the challenges but emphasize Nvidia's historical dominance and confidence in ongoing industry innovation.
Vivek Arya
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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
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