BlockBeats News, July 9th, Nvidia (NVDA.O) has significantly underperformed the overall chip industry this year. Bank of America believes this is a "more attractive buying opportunity" rather than a warning signal.

Analyst Vivek Arya acknowledges that there are indeed some factors in the market that concern investors, but he believes the market has overreacted. Rising HBM component costs have raised concerns about gross margin, but Arya believes that investors have overestimated this pressure while underestimating Nvidia's pricing power, scale advantages, and approximately $119 billion in supply chain commitments.

He expects Nvidia to offset the impact of higher HBM costs as the pricing of the next-generation Rubin platform could be significantly higher than the current Blackwell product line, thereby maintaining the gross margin at a mid-70% level. The second biggest concern for investors comes from custom chip competition, such as the TPU jointly designed by Google and Broadcom.

Arya believes that this concern is also overblown. Google's TPU has been around for over a decade, and during this time, Nvidia's GPU revenue has grown 700 times. In the long run, Nvidia is expected to account for 65% to 70% of the massive cloud service provider AI infrastructure spending. Furthermore, Nvidia's forward P/E ratio is currently around 18.69 times, close to half the average level of the past 10 years and near a low point in 11 years.