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Big pullback could hit Nvidia's stock after earnings: Bank of America

Feb 20, 2024 - markets.businessinsider.com
Bank of America analyst Vivek Arya predicts that Nvidia's stock could experience an 11% pullback following its earnings report on February 21, due to over-bullishness and high buy-side estimates. However, Arya believes this volatility will be short-lived and mainly driven by supply-side factors, not fundamentals. He expects the stock to recover after the GPU Tech Conference in mid-March, an event that has historically boosted Nvidia's stock.

Despite the potential pullback, Nvidia remains a top pick for Bank of America due to its strong performance and central role in AI development. The company has seen a 250% increase in stock value through 2023, surpassing Amazon and Alphabet in mega-cap valuations. Arya also notes Nvidia's strategic alignment with US mandates limiting chip shipments to China, which accounts for about a fifth of the company's revenue.

Key takeaways:

  • Nvidia's stock could pull back as much as 11% after earnings, according to Bank of America's Vivek Arya.
  • This volatility will be short-lived and is mainly driven by over-bullishness, not fundamentals.
  • The upcoming GPU Tech Conference in mid-March is expected to provide the stock with a boost.
  • Despite potential short-term volatility, Nvidia remains a top pick for Bank of America research analyst Vivek Arya due to its rapid ascendance in mega-cap valuations.
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