$NVDA NVIDIA, the AI chip leader, has attracted the attention of top investment banks for its undervalued status! Bank of America’s latest research report is strongly bullish, arguing that the market has overestimated NVIDIA’s operational risks, causing its stock to be significantly undervalued, with a maximum discount of as much as 50%. Now is the right window to build a position in this high-quality asset.

Bank of America analyst Vivek Arya conducted an in-depth assessment using a sum-of-the-parts valuation method based on free cash flow and reached a core conclusion: even after fully factoring in the financing risks brought by NVIDIA’s business expansion, the company’s current share price still trades at a steep 34%-50% discount to its intrinsic value.

The analyst bluntly stated that the market is currently misjudging the risks, with investors overly concerned about NVIDIA’s development risks while ignoring the company’s core growth value. This sentiment bias has created a highly cost-effective investment opportunity in NVIDIA.

In terms of market performance, NVIDIA has recently pulled back along with the broader AI sector, with its share price falling 2.3% on Tuesday to close at $219.74. Although the stock has gained approximately 18% year to date, it remains down more than 7% from the interim high reached in May, bringing its valuation further back toward a reasonable range.

On the fundamentals side, NVIDIA continues to increase its investment in the AI ecosystem, with ample growth momentum. The company recently announced a major investment plan to invest up to $105 billion in a large new data center campus in Ohio, further consolidating its leading position and competitive moat in global AI computing power.

In response to the market’s risk concerns, Bank of America also provided a clear optimization path. The bank stated that the most effective way for NVIDIA to ease market anxiety and repair its valuation is to allocate more free cash flow to share buybacks, strengthening market confidence and driving a valuation recovery by increasing cash returns to shareholders.

Based on strong growth expectations and room for valuation recovery, Bank of America officially gave NVIDIA a “Buy” rating and set a price target of $350, implying considerable upside from the current share price.