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Nvidia (NVDA, Financials) experienced a 12% decline year-to-date, with shares closing at $121.67 on Friday.
One important impetus is the forthcoming GPU Technology Conference of the business, set for March 1721. The keynote speech by CEO Jensen Huang could provide analysts new perspectives on Nvidia's long-term plan.Based on rising expenses related to its Blackwell chips, Bank of America projects that Nvidia's gross marginswhich dropped to 71%may have bottomed in the first quarter of fiscal year 2025. In the second half of the year, the investment bank forecasts margins recovering to the mid-70% level. Margins peaked at 79% during the Hopper chip cycle but have since declined owing to supply chain interruptions, increasing input prices, and complexity of AI system installations.Nvidia keeps negotiating legal obstacles, especially with relation to the effect of U.S. export limitations on its H20 processors. With a commensurate decrease of $0.30 to $0.40 in profits per share, Bank of America projects a revenue impact of $10 billion, almost 5% of total sales.With an estimated 8085% share, Nvidia has a commanding presence in the GPU industry even with more competition from application-specific integrated circuits. Investors especially pay close attention to the company's projection of the entire addressable market in artificial intelligence beyond 2026.Reiterating a Buy recommendation on Nvidia, Bank of America analyst Vivek Arya points to a "compelling valuation." With a pricing objective of $200 per share, the company implies a 64% increase over present levels. The way the market responds to Nvidia's strategic orientation at the conference and future announcements will probably determine the path of the stock in the next months.
This article first appeared on GuruFocus.