NVIDIA has underperformed its peers this year, and Bank of America says market concerns are excessive.

BlockBeats news, July 9 - Nvidia (NVDA.O) has notably lagged behind the overall chip industry in stock performance so far this year. Bank of America believes this presents a "more attractive buying opportunity" rather than a warning signal.

Analyst Vivek Arya acknowledged that there are indeed some factors worrying investors, but he believes the market has overreacted. Rising HBM component costs have sparked concerns about gross margins, but Arya argues that investors have overestimated this pressure while underestimating Nvidia's pricing power, scale advantages, and supply chain commitments of approximately $119 billion.

He expects Nvidia to offset the impact of higher HBM costs, as pricing for the next-generation Rubin platform may be significantly higher than the current Blackwell product series, thereby maintaining gross margins in the mid-70% range. The second major investor concern comes from competition in custom chips, such as Google's TPU co-designed with Broadcom.

Arya believes this concern is also exaggerated. Google's TPU has existed for over a decade, during which Nvidia's GPU revenue has grown 700 times. In the long term, Nvidia is still expected to capture 65% to 70% of hyperscaler AI infrastructure spending. Additionally, Nvidia's current forward P/E ratio is approximately 18.69 times, close to half of its 10-year average and near an 11-year low.