Financial Services Association, September 6 (Editor Bian Chun) Recently, the “AI chip hegemon” Nvidia's stock price suddenly fell short, making the bulls feel depressed, but Bank of America believes that the sharp drop in Nvidia's stock price in the past week provided an attractive buying opportunity.

On Tuesday, Nvidia's stock price plummeted, and its market capitalization shrunk by $279 billion, the biggest one-day decline in US corporate history.

Nvidia's recent performance report failed to meet the most optimistic expectations in the market, increasing concerns that investment in artificial intelligence may lose momentum, leading to a correction in stock prices.

Nvidia's stock price continued to fall on Wednesday after reports that the US Department of Justice issued a subpoena against Nvidia over antitrust concerns. Since Nvidia released its second-quarter earnings report at the end of August, the stock has fallen 15% cumulatively.

However, Nvidia later denied receiving a subpoena from the US Department of Justice.

All in all, the performance fell short of Wall Street's highest expectations, delivery issues with the much-anticipated Blackwell chip, recent rumors of antitrust scrutiny, investors' cautious investment in AI, and increased overall market volatility all contributed to this round of Nvidia's sharp decline.

It's a good time to buy

For Bank of America, the fall in Nvidia's stock price marks a good buying opportunity.

The bank said in a report released on Thursday that Nvidia's current valuation is hovering at its lowest level in the past five years.

Bank of America has set Nvidia's target share price at $165, which means investors who are buying the stock now could face 54% upside. Nvidia shares closed at $107.21 on Thursday.

Bank of America said that Nvidia will continue to be the main beneficiary of AI investments and will not always be affected by adverse factors. For example, analysts pointed out that weak supply fundamentals should subside in the short term.

Although investors are disappointed with the delay in Nvidia's next-generation Blackwell chip, Bank of America estimates that shipments should be confirmed in the next few weeks.

Furthermore, given the strong demand for artificial intelligence, Bank of America does not expect demand for Nvidia's previous generation Hopper chip to disappear.

Bank of America said that doubts about the potential of artificial intelligence remain unnecessary until at least 2026. Analysts write that those worried that the wave of AI spending hasn't paid off will have to wait patiently.

“The tech industry will spend at least another year or two to intensively build Nvidia Blackwell chips, increasing their AI training capabilities by 4 times and their reasoning capabilities by more than 25 times.” Bank of America wrote, and anticipates that the upcoming large-scale language model will unlock true artificial intelligence capabilities.

Regarding regulatory resistance, the Bank of America believes that these developments will not have an impact. At the same time, the bank also pointed out that government lawsuits against large US technology companies are not uncommon.