Nvidia’s recent share decline stems from investors “misreading the numbers,” according to Bank of America, which urged clients to look past short-term volatility and focus on what it described as the company’s strong demand outlook and exceptional free cash flow performance.
In a note released Friday, BofA analyst Vivek Arya said the sell-off “appears to be driven by a misinterpretation of the company’s quarterly results,” adding that many investors are overlooking Nvidia’s robust demand signals, improved visibility, and—most importantly—its free cash flow strength.
Arya pointed out that free cash flow surged 60% quarter-over-quarter to more than $22 billion, marking the second-highest figure in the company’s history. He called this a key measure of Nvidia’s underlying fundamentals.
Bank of America reiterated its Buy rating and maintained a $275 price target.
Concerns Over Working Capital Are Misplaced, BofA Says
Much of the recent market worry has centered on receivables and inventory growth, but BofA said these concerns lack context. Arya argued it is not the absolute size of receivables that matters, but their relationship to sales. Days sales outstanding actually fell to 53 days, down from 54 days in the previous quarter.
On inventories, the bank noted that Nvidia is expanding shipments of more advanced systems—such as Blackwell GB200 and GB300 NVL72 racks. Given the six-month deployment cycle for Blackwell-class platforms, BofA said inventory growth is appropriate and would be more concerning if it were not rising.
Nvidia’s Competitive Position Remains Strong
Addressing competition from Google’s custom TPU chips, BofA acknowledged that Gemini’s momentum could shift attention away from OpenAI’s models. However, the bank stressed that Nvidia still holds broad leadership across the AI ecosystem. Its GPUs remain widely available across all major cloud platforms and are used in nearly every leading large language model, while offering strong performance and fast deployment capabilities.
Valuation Still Attractive, BofA Concludes
BofA said Nvidia remains appealing at 24x/18x CY26/27E price-to-earnings, especially given expected sales and earnings growth above 40%. The bank urged investors to “ignore quarterly noise” and focus on Nvidia’s long-term trajectory.
