<div id="readability-page-1" class="page">Despite still dominating the AI space, Nvidia (NASDAQ:NVDA) has significantly underperformed its peers in 2026. The stock is up by a modest 4% year-to-date, while the industry barometer index, the SOX, has gained almost 72%, even when accounting for a recent pullback.<h3>4th of July Sale - 70% Off</h3>Explore NVDS for 2X short leverage on NVDA So, what is driving the muted sentiment? BofA's Vivek Arya, an analyst ranked among the top 2% on Wall Street, thinks investor concerns are based on several factors, which he has set out to address. One relates to worries about &#34;gross margin pressure from higher memory costs.&#34; Regarding this, Arya thinks investors are placing too much emphasis on HBM cost headwinds while overlooking Nvidia's ability to maintain pricing, its scale, and its $119 billion in supply-chain commitments. Although HBM content per rack could increase by approximately $0.2-0.3 million from Blackwell to Rubin, rack prices may rise by $2-3 million, moving from roughly $3-4 million to $6-7 million, as a result of improvements in compute, networking, and software offerings. As a result, Arya expects gross margins to stay near the mid-70% range. Secondly, there are concerns about custom ASIC competition. Here, however, Nvidia has faced competition from custom ASICs since Google introduced its TPU in 2015, followed by Amazon's Trainium launch in 2020 and Meta's MTIA launch in 2023. Despite this competitive landscape, Nvidia's GPU accelerator sales have grown 700x since 2015. In fact, Arya points out that according to its latest segment disclosure, Nvidia's sales to hyperscalers increased 115% YoY, nearly twice the growth rate of cloud capex, indicating that its share of hyperscaler spending is expanding rather than declining. Nvidia offers a broadly available and supported platform, whereas ASICs are specialized solutions designed for a narrower set of applications and are only accessible within the respective hyperscaler's ecosystem. &#34;Long-term we expect NVDA's breadth of AI products to help it maintain dominant (65-70%+) share of AI capex, with remaining 30-35% shared across ASICs and other merchant (AMD) vendors,&#34; the 5-star analyst said. Arya also points to &#34;crowded investor ownership,&#34; and &#34;unproductive use of cash in vendor financing&#34; compared to stronger buybacks/dividends, as points of contention. While concentrated ownership (1.15x weighting and 78% ownership among active S&amp;P 500 funds) and strategic investments of approximately $65 billion &#34;remain overhangs,&#34; he estimates that the latter accounts for less than 35% of FCF, leaving significant room for dividends and share repurchases. Meanwhile, at a &#34;high level,&#34; Arya believes that Nvidia is exposed to a similar mix of AI-driven opportunities and potential challenges from rising memory costs as its major technology peers, including Amazon, Meta, Google, Microsoft, and Apple. These five companies currently trade at an average of 22x/19x PE based on consensus CY27/28 estimates, representing a premium of approximately 30-35% compared with Nvidia's current valuation. He attributes this valuation gap to concerns around costs and competitive pressures noted above. However, he thinks those concerns will be laid to rest shortly. &#34;We expect the upcoming earnings call to be a positive catalyst, clarifying NVDA's durable moats across its products, pricing and supply chain,&#34; the analyst summed up. Bottom line, Arya maintained a Buy rating on NVDA shares, backed by a price objective of $350, implying the stock will gain 78% in the year ahead. (To watch Arya's track record, click here) The Street's average target might not be quite as high, but at $309.33, still offers 12-month upside of 57%. All told, based on 36 Buys vs. 1 lone Hold, the stock claims a Strong Buy consensus rating. (See NVDA stock forecast)</div>

NVDA

NVDY

NVDQ

Bank of America analyst Vivek Arya maintains a Buy rating on Nvidia with a $350 price target, predicting an 78% upside. He argues that recent underperformance is due to overblown concerns regarding HBM cost pressures and ASIC competition. Arya expects gross margins to remain stable near the mid-70s range and believes Nvidia will retain its dominant AI market share. The upcoming earnings call is expected to clarify these durable moats, addressing investor worries about valuation gaps compared to peers.

- Nvidia's stock has underperformed in 2026 with only a 4% year-to-date increase, while the SOX index rose nearly 72%.  
- Analyst Vivek Arya highlights concerns over gross margin pressures and ASIC competition, but believes Nvidia's strong positioning in AI and pricing power will sustain margins near mid-70%.  
- Arya maintains a Buy rating with a price target of $350, anticipating a significant upside for Nvidia shares amid positive upcoming earnings, suggesting a Strong Buy consensus among analysts.

Tip Ranks

NVIDIA

YieldMax NVDA Option Income Strategy ETF

T-Rex 2X Inverse NVIDIA Daily Target ETF

Direxion Daily NVDA Bull 2X Shares

AXS 1.5X NVDA Bear Daily ETF

NVDA 2X Long ETF

NVDA 2X Short ETF

XI2CSOPNVDA

Direxion Daily NVDA Bear 1X ETF

XL2CSOPNVDA

T-Rex 2X Long NVIDIA Daily Target ETF

ProShares Ultra NVDA

Leverage Shares 2X Long NVDA Daily ETF

Leverage Shares 2x Cpd Acclrtd NVDAMnETF

NVDA WeeklyPay ETF - Roundhill

GraniteShares YieldBOOST NVDA ETF

xETFs NVDA Daily Income ETF

YieldMax Short NVDA Option Inc Strgy ETF

XI2CSOPNVDA-U

Roundhill Daily 2X Lon Mag Sev ETF

Bank of America

Alphabet

Alphabet - C

Amazon

Meta Platforms

S&P 500

Microsoft

Apple

NVIDIA Corporation

BANK OF AMERICA CORPORATION DEP SHS REP 1/1000TH INT NON CUM PFD QQ

BANK OF AMERICA CORPORATION DEP SHS REP 1/1200TH PRF SERIES '5'

BANK OF AMERICA CORPORATION 7.25% NON-CUM PERP CONV PFD SER L

BANK OF AMERICA CORPORATION 5.875%NON CUM DEP SHS REP1/1000TH SER HH

BANK OF AMERICA CORPORATION DEP SHS REP 1/1200TH PRF SERIES '2'

BANK OF AMERICA CORPORATION 5% DEP SHS REPR 1/1000TH NON CUM PFD LL

BANK OF AMERICA CORPORATION DEP SHARES REP 1/1000TH PERP PFD SER 'E'

BANK OF AMERICA CORPORATION INCOME CAPITAL OBLIG NTS DUE 15/12/2066

BANK OF AMERICA CORPORATION 4.375% DP SH RP 1/1000TH IN NON CU PF NN

BANK OF AMERICA CORPORATION DEP SH REP 1/1200TH PRF SER 1 USD25

BANK OF AMERICA CORPORATION 5.375%DEP SHS REP 1/1000TH NON CUM SR KK

BANK OF AMERICA CORPORATION 6%NON CUM DEP SHS EACH REP 1/1000 SER GG

BANK OF AMERICA CORPORATION DEP SHS REP 1/1200 PFD SER 4 USD25

BANK OF AMERICA CORPORATION DEP SHS REP 1/1000TH NON CUM PFD SER SS

BANK OF AMERICA CORPORATION 4.125%DEP SH REP 1/1000 PFD SER PP USD25

Bank of America Corp

Nvidia Stock Has Underperformed – That's About to Change, Says Bank of America