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It’s no secret that Nvidia (NVDA), the computer game chipmaker turned AI wunderkind, has had a banner year, but for investors the party may be just beginning.
“The opportunity to generate revenue is so much greater [than investors appreciate],” Bank of America analyst Vivek Arya told Yahoo Finance editor-in-chief Brian Sozzi on his Opening Bid podcast (video above; listen below).
“They are really a system integrator at the moment. They sell complete racks with all the computers, networks, optical sources, memory and everything included,” Arya added.
The top semiconductor analyst just made a few waves in the market with his latest call on Nvidia.
He raised his EPS estimates for 2024 and 2025, citing likely strong demand for the new Blackwell chip. Demand for Nvidia’s previous AI chip – Hopper – remains strong, Arya said. Given all this, Nvidia shares are still cheap to trade with a price-to-earnings ratio of 37 times, Arya said.
With the company poised to rake in as much as $200 billion in free cash flow over the next two years, Arya said the stock also looks cheap on a price-to-cash flow basis.
Arya sees at least 40% more upside potential in Nvidia stock. Shares are already up 190% year to date and are hovering near records, amid an 18% surge in October.
Rival AMD (AMD) shares are up just 5% this year as the company’s AI chip performance specs released a few weeks ago disappointed investors.
Meanwhile, Intel (INTC) continues to experience one of the worst periods of its existence, dominated by layoffs and inferior products. Shares are down 55% this year.
Key drivers for Arya’s bullish Nvidia call (alongside less bullish views on Intel) include the upcoming next-generation AI chips: Blackwell Ultra, Rubin, and Rubin Ultra. Based on Arya’s analysis, these offerings will hit the market in the third quarter of 2025.
“Everyone is in a race,” says Arya about the country’s AI infrastructure build-out, envisioning a scenario where OpenAI and companies like Meta (META) drive the market with open structures, and cloud companies act as intermediaries . That only creates more need for Nvidia’s best-in-class chips.
It’s a demand that is real and enduring, said Tom Siebel, CEO of C3.ai (AI) during Opening Bid.
“When it comes to AI broadly, I mean this is a secular change. This is not short-lived. It’s a really big deal,” Siebel said.
Three times a week, Yahoo Finance Executive Editor Brian Sozzi fields full of insights and chats with the biggest names in business and markets Opening bid. You can find more episodes on our videohub or check your favorite streaming service.
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