Investing.com -- Nvidia shares have come under pressure in recent weeks, falling 14% since the U.S. government’s April 15 ban on shipments of its H20 chips to China.
However, Bank of America (NYSE:BAC) analysts argued in a note Tuesday that the selloff may present a buying opportunity despite ongoing risks.
In a note to clients, BofA outlined four key concerns investors currently face: China sales, new “AI Diffusion” export rules, gross margins, and cloud capital expenditure visibility.
The firm believes the China-related overhang is largely priced in. “China sales (13-14% of sales, but 3-6% of DC cut now fully baked in),” the analysts wrote.
“We view China/H20 exposure as generally de-risked,” they added. BofA said its revised EPS estimates for fiscal 2026 and 2027 “fully bakes in the cut.”
The AI Diffusion Rule, which could be implemented as soon as May 15, is viewed as the biggest near-term risk.
According to BofA, the worst-case scenario assumes another ~10% sales and up to 11% of EPS shaved off from our new base case.
Still, the analysts noted Nvidia (NASDAQ:NVDA) would be trading at “just 19x CY26 P/E today, well below historical ~30x median.”
Gross margin pressures from sales cuts and cost inflation are expected to ease over time. “We expect margins to generally improve throughout F2H as Blackwell gains scale and Blackwell Ultra ramps,” BofA wrote.
As for cloud capex, visibility into 2026 remains limited. “Cloud capex would likely need a few more quarters for CSPs to give more CY26 visibility,” the note said.
Despite lowering its price target for the stock to $150 from $160, BofA reiterated a Buy rating, citing Nvidia’s current valuation and long-term earnings potential.
“We view the current stock volatility as an enhanced buying opportunity,” the analysts concluded.