Nvidia Shares May Be Trading at a 50% Discount on AI Fears

Nvidia shares could be undervalued by as much as 50%, according to Bank of America. The bank's analysis suggests that investors are overestimating risks related to artificial intelligence chips, leading to a significant discount on the stock.

The bank's conceptual sum-of-parts analysis on Nvidia's free cash flow shows that the stock trades at a 34% to 50% discount, even after considering financing risks, writes analyst Vivek Arya. This suggests that investors are pricing in more risk than is actually present.