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Investing.com -- Nvidia’s recent stock pullback is the result of investors “misreading the numbers,” according to Bank of America, which urged clients to ignore short-term volatility and focus instead on what it called the company’s “strong demand signals” and exceptional free cash flow performance.
In a note published Friday, BofA analyst Vivek Arya said the stock correction “is likely based on a misreading of the company’s quarterly financials, and ignores the strong demand signals, visibility and MOST importantly free cash flow generation.”
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Arya highlighted that free cash flow jumped “+60% QoQ to over $22bn, second largest ever,” a metric he described as central to understanding Nvidia’s true fundamentals.
BofA reiterated its Buy rating and $275 price target on Nvidia.
Much of the market concern has centered on working-capital trends, but BofA said worries about rising receivables and inventories are misplaced.
Arya wrote that it is “not the absolute receivable $, it’s them compared to sales,” noting that days sales outstanding “declined to 53 days vs. 54 days QoQ.”
On inventories, the bank explained that Nvidia is scaling shipments of more complex systems, including Blackwell GB200 and GB300 NVL72 racks, and that “we would be more worried if NVDA inventory wasn’t growing fast,” given the six-month deployment cycle for Blackwell-class platforms.
On competitive pressure from Google’s custom TPU chips, BofA acknowledged that “Gemini’s success could take the shine away from OpenAI’s models,” but stressed that Nvidia maintains a broader position across the ecosystem.
Its GPUs, the note said, “are ubiquitous/available in every cloud and involved in almost every other LLM,” and offer “the fastest time-to-market and best performance/watt.”
BofA concluded that Nvidia remains “compelling at 24x/18x CY26/27E PE versus 40%+ sales/EPS growth,” urging investors to “ignore quarterly noise.”