Since the beginning of this year, $NVIDIA (NVDA.US)$ the stock price has cumulatively risen by nearly 180%, with a forward price-to-earnings ratio of over 40 times in the next 12 months, triggering heated discussions on whether Wall Street considers its valuation to be 'too expensive'.

Recently, Bank of America analysts Vivek Arya and Duksan Jang stated that buying Nvidia is "a once-in-a-lifetime opportunity", believing that Nvidia's valuation still remains attractive, as its 25-year PE Growth (PEG) indicator (PE / YoY EPS compound growth rate) is only 0.6 times, far below the average of 1.9 times for other companies in the Mag 7 group.

Goldman Sachs also stated that NVIDIA's pricing is reasonable, with its valuation close to the median P/E ratio of the past three years, and compared to its peers, its historical valuation is relatively low.

Bank of America, Goldman Sachs: Bullish on NVIDIA's prospects

According to Bank of America, the reason why they continue to be bullish on NVIDIA mainly stems from several driving factors:

(1) Recent industry events (such as TSMC's performance, AMD AI events, conferences with Broadcom, Micron Technology, etc., the speed of releasing large language models, comments on capital expenditures by top ultra-large-scale companies, and NVIDIA management's 'crazy Blackwell demand').

(2) Nvidia's corporate partner relationships (Accenture, ServiceNow, Oracle, etc.) and software products (NIM service) are undervalued.

（3）Having the ability to generate $200 billion in free cash flow within the next two years（free cash flow）.

Specifically, earlier this month, Nvidia CEO Jensen Huang stated in a media interview that Nvidia's Blackwell architecture chips had been "fully deployed," fueling market optimism with the insane demand for Blackwell chips.

Mid-month, AMD launched a new product targeting Nvidia's Blackwell architecture chips, but the stock price still ended sharply lower.

Yesterday, Taiwan Semiconductor announced strong performance in the third quarter and raised its full-year revenue guidance to 30%, stating that AI demand is real, overall chip demand is stabilizing, and improving.

Driven by the above factors, Bank of America expects Nvidia's EPS for 25-26 fiscal years to continue to rise by 13%-20%, and has raised Nvidia's target price to $190, implying a 37.7% upside potential compared to its Friday closing price.

Bank of America also predicts that by 2027, Nvidia's EPS will increase to over five times the original, reaching $5.67, reducing the PE ratio to a more moderate 24 times by then.

Goldman Sachs believes that fundamentally, Nvidia is also supported by the following bullish factors:

Nvidia stated that large social media and e-commerce platform enterprise users have already seen significant returns on investment in terms of AI investment.

The launch of Blackwell and the ramp-up of production capacity are not only driving recent and medium-term revenue growth, but also enhancing Nvidia's competitive advantage expansion.

With the model generator solving high throughput and low latency issues, the demand for inference computing may experience exponential growth, and Nvidia is expected to be able to seize this growth opportunity.

Nvidia's 'moat' is strong, including a large user base, innovative capabilities in chip and datacenter fields, and powerful and continuously growing software products.

The lead time of about 12 months for Blackwell GB200 products indicates the strong forward-looking nature of its datacenter business.

Considering the current high demand for AI, Nvidia's chip supply is expected to remain tight in the foreseeable future.

Sovereign AI, autonomous driving cars, and humanoid robots are also important drivers of Nvidia's current and future growth in the field of AI.

Goldman Sachs expects that the product growth based on Blackwell will continue as planned, with revenues reaching several billion dollars by the first quarter of next year, and further growth expected after April.

Editor/Somer