Bernstein analysts believe the AI trade isn't overfar from it. Despite Nvidia (NASDAQ:NVDA) dropping 15% year-to-date and an 8% single-day slide on Monday, they argue the pullback looks more like an opportunity than a warning sign. The stock is now trading at just 25x next twelve months (NTM) earnings, marking its lowest valuation relative to the SOX index in nearly a decade. Meanwhile, Nvidia's latest Blackwell product has already shipped $11 billion worth of units, indicating that supply constraints are easing while demand remains robust. Capital expenditure from major AI players is climbing, setting the stage for another growth cycle.
Regulatory risksparticularly concerns over U.S. export restrictions to Chinaare on the radar, but Bernstein sees them as short-term noise. Nvidia's China sales have shrunk as a share of total revenue, and even an H20 chip ban would likely shave off only mid to high single digits from EPSfar less than the stock's recent pullback. With AI investment still accelerating, and customers showing no signs of slowing spending, the bigger picture remains intact.
Nvidia has historically rewarded investors when trading at this valuation level, with a strong upside and limited downside risk. With a new product cycle kicking off and the highly anticipated GTC event ahead, Bernstein is holding firm on its bullish stance. The firm reiterates an Outperform rating and a $185 price target, signaling confidence that Nvidia's next surge is only a matter of time.
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