BofA Securities analyst Vivek Arya has maintained a Buy rating on Nvidia Corp (NVDA) with a price target of $165. This target reflects a 42x calendar 2025E PE excluding cash, aligning with Nvidia’s historical 21x-67x forward-year PE range. Arya justifies this valuation based on the anticipated robust growth opportunities ahead, fueled by a recovery in the gaming cycle and potentially robust and long-term demand dynamics in the data center market.
Despite these positive prospects, Nvidia faces several fundamental headwinds. These include the delay of the Blackwell chip, pressure on gross margins, and regulatory challenges such as a potential Department of Justice (DOJ) probe that could impact the stock’s performance. Additionally, Arya acknowledges perceptional headwinds, such as competition, AI monetization, cloud capital expenditure (capex), and broader market concerns including weak September seasonality, interest rate hikes, and upcoming elections.
However, Arya sees these headwinds as potential catalysts for a stronger buying opportunity. The stock currently trades at a 27x calendar year 2025 PE, falling within the lowest quartile of its valuation over the past five years compared to the median 36x PE. The key driver for a fundamental recovery will likely be supply chain data points in the coming weeks, confirming the readiness of new Blackwell product shipments.
While Arya acknowledges skepticism about AI capex and monetization, he believes these concerns are premature and unlikely to materialize until at least 2026. He emphasizes that AI capex is not only driving new business opportunities but is also crucial for protecting existing moats and significant profit pools in search, social media, and enterprise workloads.
The tech industry is expected to dedicate at least another one to two years to the intensive buildout of the Nvidia Blackwell chip, which offers a 4x list in AI training and a 25x+ list in inference. Arya forecasts that the industry’s true potential will emerge with the release of next-generation large language models (LLMs) like OpenAI GPT-5 and Meta Platforms Inc’s META Llama 4.
At the time of this writing, NVDA stock traded up 0.63% at $106.88.
