The case to buy Nvidia just got even more compelling, according to Bank of America. Analyst Vivek Arya named Nvidia a top pick, saying in a Tuesday note that chip stocks are already pricing in a recession, even as they generate better free cash flow margins than stocks in the broad market index. “While macro factors can enhance stock volatility, we believe the recent 36% peak-trough PE multiple contraction in the SOX index (vs. 27% downturn historically) already reflects a medium-sized ‘recession,'” Arya wrote. “Meanwhile chip stocks are generating ~23% FCF margins (2x+ more profitable than S & P 500 stocks) and trading at compelling 22x CY22 EV/FCF, which is below R1K value stock multiples.” Bank of America has a $270 price objective assigned to Nvidia. The price target implies nearly 45% upside from Tuesday’s closing price. Nvidia shares are down nearly 37% year to date. Additionally, Bank of America believes that Nvidia services the most “resilient” industries, including cloud computing and artificial intelligence, industrial, electric vehicle and driverless technology sectors. “In prior times, only a single end-market, say PCs or smartphones would drive semis. Now there are multiple end-markets served by a consolidated set of chip vendors, delivering proprietary products and generating solid FCF margins,” Arya wrote. “Stronger pricing and more flexible hybrid manufacturing/use of outsourced foundries could also help reduce gross margin/FCF volatility of semis in the next inevitable downturn,” he added. Chip stocks could also get a boost after China lifts some Covid restrictions, which could “re-energize” investor interest in the sector, Arya said. –CNBC’s Michael Bloom contributed to this report.