NVIDIA has underperformed its peers year-to-date, with Bank of America calling market concerns overblown.
1 hours ago
NVIDIA (NVDA.O) has significantly underperformed the broader chip sector so far this year. Bank of America views this as a "more attractive buying opportunity" rather than a risk warning. Analyst Vivek Arya acknowledges there are factors worrying investors but argues the market has overreacted. Concerns over gross margins due to rising HBM component costs are overstated by investors, Arya says, who notes they underestimate NVIDIA’s pricing power, scale advantages, and roughly $119 billion in supply chain commitments. He expects NVIDIA will offset higher HBM costs, as its next-generation Rubin platform will likely be priced much higher than the current Blackwell product line, allowing it to maintain gross margins in the mid-70% range. The second major investor concern is competition from custom chips, such as the TPU jointly designed by Google and Broadcom. Arya says this worry is also overblown: Google’s TPU has existed for over a decade, during which NVIDIA’s GPU revenue has grown 700 times. Long-term, NVIDIA will still capture 65% to 70% of hyperscalers’ AI infrastructure spending. Additionally, NVIDIA’s current forward price-to-earnings (P/E) ratio is around 18.69, nearly half its 10-year average and close to an 11-year low.
10% of fees from Robinhood Chain and other Arbitrum Layer 2 (L2) networks will be allocated to the Arbitrum ecosystem, while 8% will flow to the token holders' treasury.
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