Bank of America Reaffirms Confidence in Nvidia’s Growth

Nvidia shares extended gains this week after Bank of America raised its 12-month price target to $160 per share from $140, maintaining its “buy” rating on the stock. The revision followed an in-depth meeting with Chief Financial Officer Colette Kress, during which BofA analysts expressed heightened confidence in the chipmaker’s execution strategy and long-term earnings trajectory.

According to the bank’s note to clients, Nvidia’s growth outlook remains “unmatched” in the semiconductor industry, driven by sustained demand for AI training chips and accelerated computing platforms. The analysts highlighted a “multi-year AI infrastructure buildout,” fueled by both hyperscale data centers and sovereign AI initiatives across Europe, Asia, and the Middle East.

Nvidia’s shares rose 2.4% on Thursday to close at $128.50, extending their year-to-date rally to nearly 60%, and pushing its market capitalization above $3.1 trillion.

Data Centers Lead the Next Phase of Expansion

Bank of America’s updated valuation model places greater emphasis on Nvidia’s data-center segment, which now accounts for approximately 80% of total revenue. The division has more than doubled year-over-year, reflecting explosive demand for GPUs that power generative AI and machine-learning workloads.

The analysts pointed to Nvidia’s latest Blackwell architecture, which promises significant energy efficiency gains and higher performance — positioning the company to capture incremental market share even as competition intensifies from AMD, Intel, and custom chip developers like Google and Amazon.

“AI infrastructure spending has evolved from experimental budgets to strategic national priorities,” the report stated. “This structural shift makes Nvidia not just a technology leader, but a foundational enabler of the next digital industrial revolution.”

Valuation, Risks, and Investor Behavior

Despite its dominance, Nvidia’s valuation remains a central debate among institutional investors. The stock trades at more than 35 times forward earnings, a premium multiple that assumes sustained hypergrowth. While some investors have grown cautious about overheating in the AI trade, others argue that Nvidia’s pricing power and ecosystem moat justify its premium.

Regulatory scrutiny over advanced chip exports to China and potential supply-chain bottlenecks remain key risks to monitor. Still, BofA analysts view these as “manageable” within the company’s current operational flexibility and diversified global demand.

Investor psychology continues to play a major role — with Nvidia now perceived less as a cyclical tech stock and more as a strategic long-duration asset. This shift, analysts say, may redefine portfolio allocations for years to come.

The Road Ahead

With AI spending accelerating across sectors — from healthcare to autonomous systems — Nvidia’s influence extends well beyond semiconductors. The company’s upcoming earnings release will serve as the next major test of market expectations.

If Nvidia can deliver another quarter of double-digit growth, the stock may justify Bank of America’s renewed optimism. But with valuations near record highs, even a minor disappointment could trigger a sharp rotation in investor sentiment. For now, Wall Street’s message is clear: Nvidia remains the heartbeat of the AI economy.