What happened

After a rough Friday -- but didn't everybody have a rough Friday? -- in which its stock shed 3.6%, shares of semiconductors star Nvidia (NASDAQ:NVDA) are bouncing back Monday morning, up 2.8% as of 11 a.m. ET.

The reason: I suspect investors are shrugging off last week's bad coronavirus news and focusing on some good Nvidia news that got overlooked.

Semiconductor chip glowing white hot.

Image source: Getty Images.

So what

Specifically, I mean the news that on Friday analysts at investment bank Bank of America doubled down on their buy rating on Nvidia stock.

Updating their observations on trends in the personal computer space, in sales of gaming consoles, and in cryptocurrency mining as well, BofA confirmed on Friday that computer chip "retail inventories are still at or near record low levels with additional stock sold through within hours of arrival." Indeed, according to a report on StreetInsider.com, "overall inventory is [even] lower than last quarter," suggesting that the computer chip shortage is getting worse, not better.

Now what

This implies that Nvidia will continue to retain strong pricing power on its products throughout Q4 2021 and into 2022, says BofA, so long as "demand continues to be robust and supply continues to be unable to keep up." It further implies that Nvidia's sales could grow nearly twice as fast in 2022 as previously estimated -- as much as 9% year over year. (And gaming graphics chips could grow around twice as fast as that -- up 17% year over year).

Granted, there's still the question of whether 9% growth or 17% growth -- or even the 25% long-term earnings growth that is the consensus on Wall Street -- is fast enough to justify the 98 times earnings that Nvidia stock currently costs. But the longer Nvidia exceeds analyst expectations and grows faster than expected, the longer investors may delay asking if Nvidia stock is worth as much as it costs.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.