Wall Street expert says Nvidia stock is undervalued

Although Nvidia (NASDAQ: NVDA) stock hit a new record high early this week, Bank of America (NYSE: BAC) Semiconductor Analyst Vivek Arya has maintained that the semiconductor giant remains ‘undervalued,’ especially compared to its peers.

Arya arrived at this conclusion by emphasizing that the company’s revenue potential is far greater than many investors currently realize, during a recent interview with Yahoo Finance. 

Like most technology companies, the expert believes Nvidia’s valuation lags behind its actual growth potential. 

To put this sentiment into perspective, he highlighted that despite Nvidia’s stock trading at a higher multiple when OpenAI launched ChatGPT in November 2022, its current valuation still doesn’t fully reflect its expanding opportunities.

Arya stressed that investors often misunderstand high-multiple stocks like Nvidia, particularly when they hit new highs, as in the current situation. He suggested that investing in tech stocks with higher valuations can sometimes be more advantageous, as they have a unique ability to forecast future growth.

“The revenue monetization opportunity is so much greater. <…> When these stocks look the most expensive, what they’re really signaling is that their opportunity is getting much bigger, and the competitive position is improving,” Arya noted.  

NVDA stock price target 

The BofA analyst raised his price target for NVDA from $165 to $190, arguing that the chipmaker is a “generational opportunity.”

Overall, a majority of analysts remain bullish on Nvidia. A Finbold report indicated that 93% of experts had given the stock a ‘Buy’ rating, primarily guided by the potential of Nvidia’s Blackwell chips, which are already seeing “insane” demand, according to CEO Jensen Huang.

These chips, which experienced an initial delay due to design flaws, are seen as a potential cash cow for the technology giant. They are touted to deliver a 30x performance increase in tasks such as AI chatbot responses.

What next for NVDA share price 

NVDA’s outlook remains optimistic, but its short-term trading pattern has shown signs of weakness. 

At the close of the latest trading session, Nvidia’s share price was down 2.8% for the day, with a valuation of $139.56. However, year-to-date, the equity is up almost 190%.

In pre-market trading on Thursday, October 24, the stock is showing strength, up 1.34% at $141.33.

When discussing the next movement in NVDA’s share price, pseudonymous trading analyst PBInvesting emphasized in an X post on October 23 that the stock needs to reclaim the $140 level and consolidate above it to validate its recent strength.

Considering the chipmaker hit a new all-time high of nearly $145, the next potential target is $150, a price level supported by several analysts. 

Most importantly, if Nvidia reports better-than-expected Q3 2024 results at the end of November, the stock can target $200. With BofA already setting a target of $195, this level remains within reach for Nvidia.