Bank of America recommits to Nvidia as “top pick” in chips

Nvidia’s relatively inexpensive valuation coupled with high confidence that CEO Jensen Huang will hit all the right notes when the chip designer reports earnings on February 26 have prompted Bank of America analysts to reaffirm the stock as their top pick in the sector.

Bank of America analysts led by Vivek Arya describe the stock’s valuation, which is near its cheapest in the past five years based on the 12-month forward price-to-earnings ratio, as “compelling.”

Of course, that’s contingent on estimates for rapid growth for Nvidia (not just in 2025, but also for 2026) to remain intact or rise further. Encouragingly, DeepSeek isn’t even making a shallow mark on hyperscalers’ capex plans so far.

“Despite DeepSeek’s supposed ‘revolutionary’ optimizations, there is no change thus far to spending intentions at NVDA large customers including Microsoft and Meta,” BofA said.

Arya and co. think a trio of catalysts for the company will be discussed in its late February conference call, which should bolster investors’ faith in its growth outlook.

“The call could mark the trough in investor sentiment as: 1) we expect NVDA to reassure on Blackwell execution, 2) signal confidence around FY26/CY25 with 60%+ YoY growth in data center sales (still leaves headroom vs. TSMC’s call for AI to grow 100%+ YoY in CY25E), and 3) create excitement ahead of flagship GTC Conf. (Mar 17) where focus shifts to solid pipeline (GB300, Rubin), and physical AI (robotics),” they conclude.

Arya’s price target for the stock is $190, about 60% above where shares are currently trading.