Bank of America Thinks Nvidia Stock Could Go 50% Higher
Wall Street fears Nvidia (NVDA) is quietly turning into a bank for the AI boom. Bank of America (BofA) says that fear is exactly why Nvidia stock trades at up to a 50% discount, and it kept its $350 target.
Analyst Vivek Arya made the call as Nvidia guaranteed up to $105 billion in leases for an OpenAI data center in Ohio. Earnings arrive on August 26.
Why Investors Fear Nvidia's New Role as AI Financier
On Monday, Nvidia agreed to backstop up to $105 billion in leases at a new Ohio data center campus. SB Energy, a developer backed by SoftBank and OpenAI, will build and own the site.
The campus sits on a Cold War-era uranium enrichment site in Pike County. OpenAI signed a 20-year lease for the facility, according to Nvidia's announcement.
The worry is easy to grasp. Nvidia sells chips to OpenAI, has pledged to invest up to $100 billion in the company under a 2025 partnership, and now backs its rent. Critics call the money loop circular.
However, Arya says the market is misreading the deal. Nvidia does not guarantee OpenAI's full rent. It covers only the leftover gap if OpenAI defaults and the site is re-leased or sold. Even then, the bill is capped at $105 billion, well below the $250 billion floated in earlier reports.
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