At a time when the stock price is at a new high, Bank of America continues to be bullish on NVIDIA: not just AI, but two major "killer moves".

This year, as the "hottest guy" in US stocks, Nvidia has risen nearly 200% so far, with a market value increase of $640 billion, equivalent to the sum of the market values of the two largest banks in the United States, JPMorgan Chase and Bank of America.

As a "runaway leader" in US stocks, can Nvidia continue to rise?

On June 15, when Nvidia hit a new all-time high, Bank of America analyst Vivek Arya reiterated his buy rating on Nvidia in his latest report, believing that with Nvidia's future market share in the gaming and artificial intelligence fields, it will continue to be a leader in the semiconductor industry.

Arya said he is particularly bullish on Nvidia's upcoming new graphics cards and games:

I believe that with the launch of Nvidia's new graphics cards, market share will continue to increase to 76.4%. We expect the market to accelerate adoption of the upcoming RTX 4060, which is Nvidia's most popular "60 series" new graphics card, mainly targeting mainstream/enthusiast gamers.

In a previous report by Bank of America, they bluntly stated that Nvidia is the "gold digger of the AI era" and cited the view that merchants who sold shovels during the gold rush in the 1850s made more money than actual gold miners.

The report stated that Nvidia is in a favorable position and can profit from the increasingly heated AI competition between Microsoft and Alphabet-C, regardless of which company ultimately dominates.

The report believes that by 2027, the potential market size of these chips could grow to $60 billion, with Nvidia currently holding about 75% of the market share.

Bank of America stated that Nvidia's potential in the gaming field and leadership in AI computing will gradually become the preferred choice of major companies, while giving its competitors a poor rating. Bank of America believes that Intel will

How difficult is it for Intel to challenge Nvidia?

Patrick Moorhead, an analyst at Moor Insights & Strategy, wrote that in this round of chip wars around artificial intelligence, "Nvidia is free and clear":

No one wants an industry with only one leader.

But for now, the booming market for chips that can handle generative AI belongs only to Nvidia.

Earlier this week, AMD released the AI GPU MI300X chip, which is considered a catch-up to Nvidia. However, despite AMD's claim that its chips will outperform Nvidia's flagship product H100 in multiple metrics, it has not disclosed whether the chip has potential customers and has stated that it will only begin increasing production of new chips in the last quarter of this year.

Bernstein analyst Stacy Rasgon said that by the first half of next year when AMD's new chips are generally available, Nvidia's H100 will have been on the market for 18 months, giving it a significant lead. AMD is "far behind."

They (AMD) may get the remaining share of the (AI market) - although perhaps that is enough.

Richard Windsor, founder of Radio Free Mobile and former Nomura Securities analyst, pointed out that so far Nvidia has captured about 85% of the AI chip market share, and AMD may be "one of the most important challengers" so far, but the question is "how many developers really want to use it":

I think AMD does have the potential to gain some market share. But ultimately, Nvidia has a huge lead in this area because it started earlier than anyone else.

Is Nvidia's price reasonable?

However, some analysts believe that Nvidia's price of a 190% increase in just six months is too high and unreasonable.

Aswath Damodaran, a finance professor at New York University's Stern School of Business known as the "father of valuation," believes that Nvidia's rise this year is reasonable, but the current stock price of around $415 is not.

Damodaran said that he had taken profits in May as Nvidia's stock price soared:

I think you have to dominate the entire AI market to justify the valuation that it has. That's a bet I'm not willing to take, and the upside on the stock is now limited.

Not only Damodaran, but Edmond de Rothschild, a Rothschild family-owned asset management firm, has long been overweight on Nvidia, and the company's CIO said that the position is now much smaller. Given the high valuation of AI, it is becoming increasingly uncertain whether to increase holdings of AI technology stocks, and if the valuation continues to grow, it will be more cautious.

"Cathie Wood," also known as "Wooden Sister," tweeted that Nvidia's current pricing is too high, and its flagship product, ARK Innovation ETF, had already sold Nvidia stock in January.

Indeed, from a valuation perspective, since Nvidia's release of better-than-expected financial reports, its valuation has become increasingly extreme. The latest data shows that its P/E ratio has exceeded 200, compared to an average of about 31 for the US chip industry and around 30 for other tech giants. **

Compared to its revenue, Nvidia's market value is 36 times its revenue in the past year, the highest among several other tech giants. Microsoft has the highest market value-to-revenue ratio of 12.6, far surpassing Apple (7) and Alphabet-C (5.6).