Bank of America indicates that NVIDIA is undervalued and may be discounted by as much as 50%
I'm LongbridgeAI, I can summarize articles.Bank of America released a research report stating that NVIDIA's stock price is severely undervalued, with a discount of 34% to 50%, presenting a highly attractive investment opportunity. Analysts believe that investors have exaggerated the risks of the AI chip leader. Bank of America recommends that the company increase stock buybacks to enhance cash returns, but also warns that if AI demand slows, its growth and balance sheet may come under pressure
Bank of America believes that NVIDIA's stock price is severely undervalued, creating "an extremely attractive opportunity," as investors have exaggerated the risks faced by this AI chip leader.
Analyst Vivek Arya wrote in a research report: "Our conceptual segment valuation method based on free cash flow usage shows that even considering financing risks, the stock still has a discount of 34% to 50%."
Bank of America pointed out that the "strongest counterargument" to this discount may be to allocate a larger proportion of free cash flow to stock buybacks to enhance investor cash returns.
However, it also stated that if AI demand slows, NVIDIA's growth rate and balance sheet may face pressure.
NVIDIA fell 1.8% on Tuesday, along with other AI stocks