Investors may be forgetting that Nvidia (NVDA) is the dominant player in the AI chip game — at least through the lens of the valuation on the chip king's stock.
The call: Nvidia shares are trading at a roughly 40%-50% discount to AI compute peers on an enterprise value-to-free cash flow basis, according to new research from Bank of America ****** yst Vivek Arya. What's more, the stock is trading at a 31% to 36% discount to the S&P 500 (^GSPC).
The relative valuation discount on Nvidia is "overstating the risks" ****** ociated with investments in companies such as OpenAI (OPAI.PVT) and Anthropic (ANTH.PVT) and creating a "compelling opportunity," Arya said.
Despite an 8% rally over the past month heading into Nvidia's Aug. 26 earnings report, shares of Nvidia are still 7% below their 52-week high. Nvidia's stock hit a 52-week high of $236.54 on May 14, per Yahoo Finance AlphaSpace data.
If there is any reason to proceed with caution ahead of Nvidia's earnings, it's that the market is positioned for the company to post something great and for CEO Jensen Huang to sound super bullish on the earnings call.

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