Nvidia is up just 4% in 2026, while the broader semiconductor index, the SOX, has surged nearly 72%. That’s a stark gap for a company that still dominates AI chip infrastructure.
Bank of America analyst Vivek Arya, ranked in the top 2% on Wall Street, says the underperformance isn’t justified — and he’s putting a $350 price target on NVDA to back that up. The stock currently trades around $197, meaning BofA sees roughly 78% upside from here.
Arya lays out four main concerns weighing on investors: gross margin pressure from higher memory costs, competition from custom ASICs, crowded institutional ownership, and what he calls an unproductive use of cash tied to vendor financing.
His view? Each of these concerns is either overstated or misunderstood.
On memory costs, Arya argues that while HBM costs per rack could rise by $0.2–0.3 million moving from Blackwell to Rubin architecture, rack prices themselves could climb $2–3 million — from roughly $3–4 million to $6–7 million. That pricing power, he says, should keep gross margins near the mid-70% range.
The ASIC threat is real, but it’s not new. Google launched its TPU in 2015. Amazon followed with Trainium in 2020. Meta’s MTIA came in 2023. Through all of it, Nvidia’s GPU accelerator sales grew 700x.
Nvidia’s latest segment data shows sales to hyperscalers rose 115% year-over-year — nearly twice the growth rate of cloud capex spending. Arya says that points to Nvidia gaining share, not losing it.
The key difference between GPUs and ASICs, he notes, is breadth. ASICs are purpose-built for specific workloads inside a single hyperscaler’s ecosystem. Nvidia offers a platform that works across the board. Arya expects Nvidia to hold 65–70% of AI capex spending long-term, with the remaining 30–35% split between ASICs and other vendors like AMD.
On ownership concentration, about 78% of active S&P 500 funds hold NVDA, with a 1.15x weighting. Strategic investments sit at around $65 billion. Arya acknowledges these as overhangs but estimates the investments consume less than 35% of free cash flow, leaving room for buybacks and dividends.
Arya is pointing to the upcoming earnings call as the moment that could shift sentiment. He expects it to “reinforce Nvidia’s moats in products, pricing, and supply chain.”
At current levels, he says NVDA is trading at an 18x forward PE — a seven-year low. Its large-cap tech peers — Amazon, Meta, Google, Microsoft, Apple — trade at an average of 22x–19x forward PE on CY27/28 estimates. That’s a 30–35% premium over Nvidia, which Arya calls unjustified given the growth profile.
The Street broadly agrees. Of 37 analyst ratings, 36 are Buys and one is a Hold. The average price target sits at $309.33, still implying 57% upside over 12 months.
The post Nvidia (NVDA) Stock Is Lagging the SOX by 68% — BofA Says That’s a Buying Opportunity appeared first on CoinCentral.
