Bank of America equity analyst Vivek Arya$NVIDIA (NVDA.US)$ ...

In a report written on Thursday, Arya expressed the view that although NVIDIA's sharp rise may encourage short-term profit-making sales, “(volatility) is likely to end in a short period of time,” thanks to the company's strong fundamentals and attractive valuations, the resulting “(volatility) is likely to end in a short period of time.”

This confidence is due to several factors:

1. Deployment of generative AI hardware: There is a possibility that the generative AI hardware cycle will be 3 to 5 years, presenting a long-term opportunity of 300 billion dollars or more, equivalent to 3 times the current one.

2. New Blackwell AI accelerator system: Nvidia's new AI system, which will be launched later this year, is in strong demand from cloud customers.

3. Increased demand for on-premise AI: Along with the initial stages of software monetization, demand for enterprise AI and AI for sovereign companies is increasing.

4. Attractive valuations: NVIDIA's valuation is 35 to 40 times the consensus in a bullish earnings scenario of 5 dollars per share and about 30 times PE, which is lower than the expected annual earnings growth of 50% or more from 2023 to 2026.