BofA’s Hartnett says concentrated U.S. stock returns are likely to persist
On Monday, BofA Securities expressed continued confidence in NVIDIA Corporation (NASDAQ:NVDA), maintaining a Buy rating and a price target of $160. The endorsement follows NVIDIA’s CEO’s keynote at Computex 2025 and subsequent discussions with the company’s CFO. With a market capitalization of $3.3 trillion and an "EXCELLENT" financial health rating according to InvestingPro, NVIDIA continues to dominate the semiconductor space. Analyst Vivek Arya highlighted several key takeaways from the event and interactions that reinforce the positive outlook for NVIDIA.
The analyst noted NVIDIA’s expanding portfolio, which includes a broad set of AI products for various sectors such as cloud, enterprise, humanoid robots, workstations, gaming, and quantum computing. This diversification supports the company’s position in what NVIDIA refers to as a multi-trillion-dollar AI factory industry. The company’s strategy appears to be paying off, with revenue growing an impressive 114% over the last twelve months and achieving a perfect Piotroski Score of 9, indicating exceptional financial strength. For deeper insights into NVIDIA’s financial health and growth metrics, InvestingPro offers over 20 additional key indicators. Moreover, the introduction of NVLINK Fusion was pointed out as a significant development, as it opens NVIDIA’s proprietary interconnect and networking technology to third-party custom accelerators (ASICs) and CPUs, potentially expanding the company’s total addressable market.
Another point of interest is the full production of rack-scale GB200 NVL 72 Blackwell Systems, which the company is confident about, especially with the easier transition path to the next-generation Blackwell Ultra GB300 systems expected to start from Q3. Additionally, the RTX Pro enterprise server was mentioned as an extension of AI into the enterprise sector, positioning NVIDIA as a more formidable competitor to legacy x86 systems.
Separately, Arya remarked on the potential benefits stemming from last week’s deals in the Middle East, which are part of a five-year sovereign AI buildout project. While the immediate impact in the second half of the calendar year 2025 is anticipated, more significant benefits are expected from the calendar year 2026 onwards, due to the time required to establish new infrastructure.
BofA Securities reiterates NVIDIA as their top sector pick, pointing to the May 28 earnings call as the next important catalyst for the company. Current InvestingPro analysis indicates the stock is trading above its Fair Value, with multiple valuation metrics suggesting premium pricing. The earnings call is expected to draw significant attention, particularly due to the contentious nature of the recent restrictions on China H20 shipments, which have not been uniformly factored into sell-side projections. Investors should note that NVIDIA has demonstrated strong momentum, delivering a 46% return over the past year.
In other recent news, NVIDIA has introduced NVLink Fusion, a new technology aimed at enhancing artificial intelligence infrastructure by allowing the creation of semi-custom AI systems. This innovation, announced at COMPUTEX in Taipei, is expected to help industry partners scale their AI capabilities to meet increasing demands. Additionally, Mizuho (NYSE:MFG) Securities has raised its price target for NVIDIA to $168, maintaining an Outperform rating, reflecting confidence in the company’s upcoming earnings report and product pipeline. Analyst Vijay Rakesh anticipates a mixed near-term performance but projects strong growth in the latter half of the year, particularly with the ramp-up of the GB200 NVL72.
In other developments, Raymond (NSE:RYMD) James has maintained an Underperform rating on NVIDIA, with a price target of $150. The firm highlighted potential challenges such as a $4 billion headwind due to H20 export restrictions but noted optimism for the second half of the year driven by hyperscale capital expenditure trends. NVIDIA’s earnings are expected to show a sequential revenue increase, although the H20 restrictions might limit growth. Furthermore, NVIDIA’s CEO has revealed new technologies to maintain the company’s position in the AI chips market.
Finally, Tesla (NASDAQ:TSLA) and Alphabet (NASDAQ:GOOGL) have led a rebound in the Magnificent Seven tech stocks, including NVIDIA, following a previous downturn. This resurgence is part of a broader positive trend in tech stocks, partly driven by AI-related deals announced during President Donald Trump’s visit to the Middle East.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.