Investing.com -- Bank of America reiterated its Buy rating on Nvidia (NASDAQ:NVDA), maintaining a price objective of $165 on the stock, citing "compelling growth at [a] compelling valuation."
Despite short-term challenges, BofA analysts see these hurdles as creating an attractive buying opportunity.
Nvidia faces several headwinds in the near term, including delays in its Blackwell product line, regulatory scrutiny from a potential DOJ antitrust investigation, and market challenges like weak seasonality and interest-rate concerns, according to the bank.
However, BofA emphasizes that these challenges could actually enhance the stock's buy potential.
The stock currently trades at about 27x its expected CY25 price-to-earnings (P/E) ratio, which BofA notes is in the lowest quartile of its five-year range, making it particularly attractive at this level.
Regarding the DOJ investigation, BofA notes that Nvidia's AI chips are in high demand, and even with Blackwell delays, the company expects consistent growth due to the strength of its previous generation Hopper chips.
BofA also stresses that Nvidia's products "have consistently trounced industry benchmarks," making its dominance in AI unlikely to diminish significantly.
BofA is bullish on Nvidia's AI prospects, particularly with the upcoming next-gen large language models (LLMs) like OpenAI's GPT-5 and Meta (NASDAQ:META)'s Llama 4.
These new models, built on Nvidia's chips, are expected to bring advancements in reasoning, reliability, and autonomy.
"AI capex is not just driving new business opportunities, it's also critical in protecting existing moats and large profit pools in search, social and enterprise (chat, copilot) workloads," adds BofA.
BofA views Nvidia as a top pick in the tech sector. "The key fundamental recovery catalyst will likely be supply chain data points over the next several weeks, confirming the readiness of new Blackwell product shipments," they conclude.