BofA calls Nvidia stock a compelling buying opportunity at seven-year low valuation

Nvidia’s stock is trading at its cheapest valuation in seven years, and Bank of America thinks that’s a gift. The firm reiterated its Buy rating on NVDA on July 8 with a $350 price target, arguing that the market’s hand-wringing over margins and competition has created a textbook entry point for investors willing to look past short-term noise.

At roughly 18 times forward earnings, Nvidia’s price-to-earnings ratio sits at levels not seen since 2019. For a company that has essentially become the picks-and-shovels supplier to the entire AI gold rush, that kind of discount gets Wall Street’s attention.

The bull case in numbers

BofA analyst Vivek Arya laid out a straightforward thesis. Nvidia’s current stock price reflects what he considers overly negative assumptions about both the company’s earnings trajectory and the competitive threat posed by custom ASICs, the specialized chips that some hyperscalers are developing in-house.

The valuation math is hard to argue with on paper. Nvidia trades at approximately 0.5 times its PEG ratio, with projected average sales growth of 42%. In English: the stock is priced as if the company’s growth engine is sputtering, when the actual revenue trajectory suggests it’s still accelerating.

Arya’s view is that concerns about memory costs eating into margins and custom silicon stealing market share are valid conversations to have. But the market has overcorrected, pricing those risks as near-certainties rather than possibilities.

This isn’t a sudden burst of optimism from BofA, either. The firm has been steadily raising its conviction on Nvidia throughout 2026. It bumped the price target from $300 to $320 on May 13, then reset it higher to $350 in early June after meetings with Nvidia’s management team, including discussions with the company’s CFO.

Why the stock got cheap in the first place

Several factors converged to create this discount. The market has grown increasingly nervous about the sustainability of AI infrastructure spending, with some investors questioning whether hyperscalers like Microsoft, Google, and Amazon will maintain their current pace of GPU purchases. There’s also the looming specter of custom chips. Companies like Google with its TPUs and Amazon with its Trainium processors have been investing heavily in alternatives to Nvidia’s hardware.

BofA’s counterargument is essentially that all of these concerns are already baked into the price, and then some. When a company with 42% projected sales growth trades at an 18x forward P/E, the market is basically saying it doesn’t believe the growth will materialize. Arya thinks that skepticism is overdone.

It’s worth noting what BofA’s report did not mention: crypto. Nvidia has historical ties to digital assets through its GPUs, which were once the hardware of choice for proof-of-work mining operations. But the July 8 analysis focused entirely on AI and data-center demand, reflecting how thoroughly Nvidia’s investment narrative has shifted away from crypto mining toward artificial intelligence infrastructure.

What this means for investors watching the AI trade

BofA identifies Nvidia as its top semiconductor pick, citing the company’s full-stack leadership in AI hardware and software.

The PEG ratio of approximately 0.5 is particularly telling. A PEG below 1.0 generally suggests a stock is undervalued relative to its growth rate. At 0.5, Nvidia is trading at half the level that traditional valuation frameworks would consider fairly priced for its growth profile.

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