Bank of America is urging investors to stay the course with Nvidia (NVDA), even as shares inch lower following the artificial intelligence (AI) darling’s annual GTC conference. In a research note dated March 18, analyst Vivek Arya maintained his “Buy” rating and a $300 price target on the chipmaker, indicating potential upside of more than 65% from here.
While Nvidia stock is already up nearly 90% versus its 52-week low, Arya believes the market is still underestimating the sheer scale of the AI infrastructure cycle ahead.
Why BofA Remains Uber Bullish on Nvidia Stock
The cornerstone of BofA’s bullish call lies in the fact that Nvidia’s total addressable market (TAM) is far wider than previously modeled.
According to Arya, while the widely cited $1 trillion number for data center sales by 2027 is exciting in itself, it doesn’t actually account for CPUs, STX storage racks, and LPX LPU racks.
These hardware layers represent “an incremental ~50% opportunity on top” of the company’s core GPU business, he added.
All in all, as the industry pivots toward co-packaged optics with the upcoming Rubin Ultra and Feynman lines, NVDA shares are strongly positioned to capture the entire plumbing of the AI era.
Capital Return Discipline Makes NVDA Shares Attractive
Arya remains bullish on Nvidia shares also because he sees the release of LPX as a game-changer, opening up an entirely new ~25% of ultra-low-latency AI workloads.
These specialized tasks are expected to be “eight and ten times as profitable as the remaining 75%,” serving as a massive tailwind for the company’s bottom line, he told clients.
Furthermore, as token economics improve — now hitting a cost-effective $6 per 1 million tokens — the BofA analyst is confident NVDA can “sustain healthy gross margins over the long-term.”
Finally, management’s commitment to return 50% of the free cash flow to shareholders makes this AI stock even more attractive for long-term investors.
How Wall Street Recommends Playing Nvidia
Other Wall Street analysts agree with Arya’s constructive view on Nvidia as well.
The consensus rating on NVDA stock sits at “Strong Buy” currently, with the mean target of about $266 indicating potential upside of nearly 50% from here.
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On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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