Nvidia stock fell 22%. Here’s why one top Wall Street analyst thinks it’s time to load up on artificial intelligence (AI) stock.

For years, Nvidia (NVDA 3.54%) he was a superstar prospect in the investment world. However, the stock isn’t as hot right now as it was at the start of 2024. Nvidia’s share prices are down more than 22% from their peak set in June. The stock fell further a month ago before making a temporary rebound that quickly faded.

Is it time to sell Nvidia? Some might think so. But one top Wall Street analyst thinks it’s time to load up on artificial intelligence (AI) stock.

Behind Nvidia’s decline

There are several factors behind Nvidia’s recent decline. The delay in shipping GPUs based on the company’s new Blackwell architecture is a top one. Investors have been hoping that revenue from these powerful new chips will start hitting Nvidia’s top line sooner rather than later.

Nvidia’s second-quarter earnings results also arrived with a bang. The company beat Wall Street’s revenue and earnings estimates. However, sometimes official estimates are not quite what analysts want. Nvidia failed to hit the so-called “whisper numbers” in Q2.

Some investors were also concerned that the AI ​​boom had run its course. They worry that Nvidia customers could cut back on spending on the GPUs they need to power AI models.

Finally, Bloomberg News reported last week that the US Department of Justice had issued a subpoena to Nvidia as part of an investigation into the company’s potential violations of federal antitrust laws. Nvidia denied receiving a subpoena, but the story sent its shares further down.

A “convincing” rating.

These issues could cause some investors to choose to stay on the sidelines. However, Bank of America analyst Vivek Arya thinks now is a great time to buy Nvidia stock. Arya acknowledged in a note to investors last week that “market forces could increase volatility in the stock in the near term.” But he added that Nvidia’s valuation is “compelling,” with shares trading at about 27 times consensus earnings for fiscal 2026 — the cheapest valuation for Nvidia in five years.

Bank of America’s 12-month price target is $165. This reflects a 55% stage growth potential.

What about the Blackwell delay? BofA expects Nvidia to confirm that shipments are underway in the next few weeks. That view seems to align with comments made by Nvidia CEO Jensen Huang on the company’s Q2 earnings conference call. Huang said deliveries will begin in Q4. Even without Blackwell, Arya projects that demand for Nvidia’s previous-generation Hopper chips will remain strong.

BofA doesn’t think the AI ​​boom is anywhere near over. Arya wrote: “The tech industry will give itself at least another 1-2 years of intensive development” of Nvidia’s Blackwell chips. He added: “Efforts so far with the first wave of large language models (LLMs) using NVDA Hopper have only been the teaser.”

As for the investigation reported by the Department of Justice, Bank of America does not expect any impact on Nvidia at this time. The Wall Street firm said federal investigations are not unusual for major U.S. technology companies.

Is this Wall Street analyst right about Nvidia?

I can’t find much to gripe about with everything Bank of America has said about Nvidia. The stock’s valuation is arguably the most compelling it has been in a long time. I suspect Nvidia will confirm Blackwell shipments in the near future. Demand for the company’s Hopper GPUs will almost certainly remain robust until Blackwell GPUs are available in large quantities.

BofA is almost certainly right that the AI ​​boom will continue for at least another year or two. Comments made by executives from cloud services giants Amazon, Microsoftand Alphabet in their recent quarterly calls support this view.

I also agree that it is far too early to assume that any DOJ investigation will affect Nvidia. Such probes can lead nowhere.

My only qualm with Bank of America’s view on Nvidia is that I’m not sure if the stock will rise 55% over the next 12 months. However, I wouldn’t bet on it not happening. Even if Nvidia falls short of BofA’s price target, the knockdown AI stock looks like a good pick to load up on during the current pullback.