Issues facing Nvidia 'short-term', stock at attractive valuation, says BofA's Vivek Arya

And joining us now is B of A security senior analyst Vivek Arya has a buy rating on both stocks. Good to see you. So I guess with NVIDIA doing what it has recently raises the question, how vulnerable is NVIDIA in the short and medium term to the market's overall risk sentiment? I mean, NVIDIA is lower since the election. Right. Hi, John. Thanks for having me. I think NVIDIA. So is our topic for for next year. We like Broadcom and Marvell for that matter as well, because these three companies are ideally positioned to capitalize on this demand for AI infrastructure. I think specific to NVIDIA, there are two issues that are have been affecting it near term. One is the execution on the new Blackwell product. You know, the last two quarters they have reported there have been some production issues with Blackwell that they have resolved. Then there were some delays in getting it out to hyperscalers. And I think those will also be resolved. So in our perspective, this is actually a very attractive opportunity to look at NVIDIA because these concerns will be short term in nature. When we look longer term and look at the situation that Broadcom mentioned, that in the next few years there could be greater demand for custom chips, I don't think that is inconsistent with the way we have thought about the market, which is about 80 percent of the market will be merchant accelerators, where NVIDIA will dominate. And about 15 to 20 percent of the market will be more custom chips, where Marvell and Broadcom I think will do extremely well. So we think of these as very complementary in nature. And some of the issues around NVIDIA we think are very short term, and the stock is trading at a very attractive valuation right now. Zooming out a bit, we're in day two of the Qualcomm ARM trial, and ARM has been such a big part of the smartphone story, now the AI story. Is there any risk to semiconductors overall in how that plays out? Sure. So I won't comment on the litigation per se, John, but with ARM I think the one advantage they have is that it is impossible to make a mobile product without ARM. Number two, they are starting to take a share on the data center server side. You know, we were just talking about custom chips. We have Amazon with Graviton launching chips based on ARM. On the server CPU side, we have NVIDIA with Grace. That's based on ARM. We have Google with Axion. That's based on ARM. So they are taking more share in server CPUs. And then on the PC side, today, at the early days, it was just Qualcomm with ARM-based AI PCs. Next year, I think we are going to see multiple players launch those. So we see ARM as just a beneficiary of this rising trend of adoption across these different parts of computing. So our assumption is that the litigation gets resolved one way or another. But the key for ARM is just broad adoption in a variety of these environments.