Last week's financial report failed to boost the "darling" of AI in the past two years, and instead suffered a head-on blow from the September stock market "curse": a cumulative decline of 11% in the first two trading days of September. However, a recent report by Bank of America suggests that the recent unfavorable environment has made Nvidia's valuation look quite attractive, providing investors with an enticing buying opportunity. $NVIDIA (NVDA.US)$ On the contrary, the financial report from last week did not boost the AI "darling" of the past two years, but instead suffered a heavy blow from the September stock market "curse": a cumulative decline of 11% in the first two trading days of September. However, a recent report by Bank of America suggests that the recent unfavorable environment has made Nvidia's valuation look quite attractive, providing investors with an enticing buying opportunity.

On the first trading day of September this week, Nvidia's stock price fell 9.5%, causing a market value loss of nearly $280 billion in a single day, making it the largest single-day decline in market value of any US stock. Subsequently, Wall Street Journal mentioned that Nvidia's stock price fell after the release of its financial report, highlighting investors' concerns about overvaluation, slowing revenue growth, and the sustainability of the overall AI chip investment frenzy. Nvidia's third-quarter revenue guidance shows that revenue growth will slow from triple-digit percentages for the past five quarters to nearly 80%, which some interpret as a sign of cooling demand for the company's AI chips. The financial report has raised doubts in the market about the sustainability of massive investments in AI hardware.

Furthermore, on Tuesday after the market closed, there were reports that the US Department of Justice has issued a subpoena to Nvidia for an antitrust investigation, adding to the regulatory risks and further impacting Nvidia's ability to rebound on Wednesday.

In summary, the financial report that did not meet Wall Street's highest expectations, production issues with Nvidia's highly anticipated Blackwell chip, recent regulatory scrutiny, cautious investor sentiment towards AI trading, and overall market volatility have all contributed to this sharp decline in Nvidia's stock. A recent report by analysts from Bank of America, including Vivek Arya, believes that these factors combined can create a "compelling" buying opportunity for investors, as Nvidia's stock price has dropped to the lowest quartile range of valuation in the past five years.

The report states:

"The key catalysts for fundamental recovery for Nvidia may be the supply chain data in the coming weeks to confirm the readiness of shipments for the new Blackwell product."

Although NVIDIA's stock price lacks positive catalysts in the short term, its stock price is expected to be supported in the coming years as enterprise customers use NVIDIA chips, including the Hopper and Blackwell series, to build AI capabilities. According to Bank of America's report:

"The technology industry will spend at least another year or two intensively building NVIDIA's Blackwell chip, which will increase AI training capabilities by 4 times and inference capabilities by more than 25 times. So far, it is still part of the first wave of large language models (LLMs), and using NVIDIA's Hopper chip is just the beginning."

Bank of America reiterated that NVIDIA is their top pick in the industry and gave the stock a buy rating with a target price of $165. This target price implies that Bank of America expects NVIDIA's stock price to rise by about 55% from Wednesday's closing.

In addition to Bank of America, some market participants believe that now is a good time to buy NVIDIA. Piper Sandler analyst Harsh Kumar still bullish on NVIDIA and pointed out that the market demand for NVIDIA's Hopper chip is strong, and further growth is expected in the second half of the fiscal year. At the same time, revenue from Blackwell chips is on track. Wedbush Securities analyst Daniel Ives said NVIDIA's chips have become the new oil and gold in the IT field, driving the AI revolution and currently the only choice.

On Thursday, NVIDIA's stock price initially fell nearly 1.4%, but quickly turned higher. During the morning session, it rose more than 3.2% and then gave back most of the gains. At midday, the increase was less than 1%, rebounding after two consecutive days of declines and breaking out of the low closing since August 9.

Editor/Somer