BofA just put out a note saying the market is basically pricing in a 30-35% earnings hit for Nvidia that they think is way too pessimistic.
The valuation math is kind of wild when you look at it. $NVDA is trading at 15.7x CY2027 earnings. Mega-cap peers like Apple, Microsoft, Meta are averaging 22.3x. So either those are overvalued or NVDA is being punished for risks that may never fully materialize.
On the HBM cost concern, BofA's take is that rack pricing goes from $3M on Blackwell to $6-7M on Vera Rubin, so the margin pressure from HBM ($0.2-0.3M per rack increase) gets absorbed. Mid-70% gross margins expected to hold.
The custom chip threat narrative, Google, Amazon, Meta have been building their own chips forever and NVDA still took 65-70% of AI capex. The hyperscaler revenue was up 115% YoY. Hard to call that a company getting displaced.
Checked the charts on moomoo and 78% of active S&P 500 funds already own NVDA. That cuts both ways, deep penetration means less new buyers but also means big money isn't exactly running away.
BofA's price target is $350. Am I buying that thesis? Kinda, but the macro risk is real.
Anyone else holding through this or trimmed already?
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