Don't Worry About the Recent Sell-Off in INVISTA; Stock Still Has 26% of Upside, Bank of America Says

• Since the end of March, NVIDIA's stock price has been on a downward spiral, retreating more than 10% from its all-time highs.

• Analysts at Bank of America Merrill Lynch (BofA) say there's nothing to worry about, and that the company will remain dominant in the artificial intelligence chip space.

• None of the factors behind the sell-off will have a significant impact on Nvidia's prospects, they said.

Shares of NVIDIA have recently tumbled, falling more than $10% from their latest all-time high, but Bank of America is telling investors not to worry about the recent downturn, as the chip giant is still in a dominant position.

Bank of America analysts led by Vivek Arya said in a report on Wednesday that they remain bullish on Nvidia, despite the fact that its stock has plunged 11% since the end of March, and that they expect the company to continue to maintain its position as an industry-leading chip maker, fueling the booming field of artificial intelligence.

Analysts note that since ChatGPT's November 2022 IPO, the recent share price decline is the ninth time it has exceeded 10%.

The bank maintains a price target of $1,100 per share, giving the stock 26% upside from Wednesday's price in Rock. The stock changed hands at $867.62 around 12:45 p.m. Wednesday.

"The analysts wrote in their report: "Although NVDA shares have the potential for summer consolidation on aggregate in the near term (as was the case in August-December last year), we believe its fundamentals are on track and that periods of consolidation tend to set the stock up for a strong run later on.

They added that Nvidia's recent share price decline can be attributed to a number of factors, such as rising inflation, increased competition from other chipmakers, market volatility, weakness in AI stocks, cyclical sector rotation, and the possibility of trimming some of its positions ahead of earnings season. However, these factors have not changed the view on the company.

Nvidia's latest Blackwell chips can boost AI performance by up to 5x and are designed to reduce AI inference costs and energy consumption by up to 25x. This, combined with Nvidia's strong foothold in the enterprise space, gives BofA analysts more confidence in the company's ability to maintain and grow market share in the chip space.

Although Nvidia faces competition from Google and Intel, the firm believes that their processors pose a limited threat to Nvidia's dominance.

Google just announced Axion, an ARM-based server CPU, and Nvidia has its own processor, Grace, but the company doesn't see the impact of Google's new product on Nvidia since it doesn't sell its own CPUs.

Meanwhile, Intel also announced its Gaudi 3 gas pedal this week, which it claims will improve inference performance by 50% compared to Nvidia's two-year-old H100 chip, although Bank of America expects Gaudi 3 to have less than 1% of share of the AI gas pedal market.

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