- Nvidia‘s (NVDA) stock has remained flat this year, lagging behind major U.S. indexes, due to concerns like DeepSeek’s lower-cost AI models, a shift towards ASICs, and delays in the Blackwell chip.
- Despite these challenges, analysts from Evercore ISI and Bank of America (BAC) remain bullish, defending Nvidia’s stock with high price targets of $190, citing its strong software ecosystem and lead in AI development.
- The competitive landscape is intensifying with moves by Amazon (AMZN), Google (GOOG, GOOGL), and others into AI chip production, but Nvidia’s upcoming earnings and events are anticipated to reaffirm its market position and growth potential.
Nvidia (NVDA), despite being a frontrunner in the AI chip market, has seen its stock remain flat this year, underperforming the major U.S. indexes like the Dow (DJIA), S&P 500 (SPX), and Nasdaq (COMP), which have all recorded gains. This unexpected weakness has prompted analysts to engage with clients, attempting to rationalize the situation while largely defending Nvidia’s stock value. Evercore ISI’s Mark Lipacis highlighted three main reasons for this downturn: the emergence of China’s DeepSeek, which has introduced cheaper AI models; a potential shift in AI computing from Nvidia’s GPUs to more specialized ASICs; and delays in Nvidia’s new Blackwell chip.
However, Lipacis remains optimistic, maintaining an ‘Outperform’ rating and a $190 price target – a 41.4% increase from the stock’s current price of $134.42 – emphasizing Nvidia’s dominant position in the AI ecosystem. His argument rests on Nvidia’s unchallenged lead in software support and developer community, which he claims places Nvidia years ahead of competitors like Advanced Micro Devices (AMD) and Amazon (AMZN) AWS. Despite these bullish sentiments, concerns about Nvidia’s market position have grown, especially with DeepSeek’s cost-effective AI model, RI, challenging the narrative that only a few companies could afford to train high-performing AI models.
The landscape is further complicated by significant moves from other tech giants. Amazon’s $8 billion partnership with Anthropic and Google’s introduction of the Willow AI supercomputer chip are clear signals of Big Tech’s intent to carve out a piece of Nvidia’s market share. Additionally, companies like Broadcom (AVGO) and Marvell (MRVL) are pushing forward with their own advanced custom chips, intensifying competition in the AI hardware space.
Despite these headwinds, analysts like Bank of America’s (BAC) Vivek Arya remain steadfast in their support for Nvidia, continuing to rank it as a top pick for 2025 with a similarly high $190 price target. Arya’s optimism is based on expectations that Nvidia’s upcoming earnings call – scheduled for Wednesday, February 26, 2025 – could mark a sentiment trough, with potential reassurances on Blackwell’s execution, strong growth forecasts for data center sales, and the excitement around Nvidia’s GTC Conference where new projects like GB300 and Rubin, along with advancements in physical AI such as robotics, will be showcased.
This scenario paints a picture of Nvidia at a crossroads, where its established dominance is being tested by new entrants and innovative cost-saving strategies from competitors. Yet, the consensus among analysts suggests that Nvidia’s foundational strengths in AI technology and ecosystem development could continue to hold its stock as a valuable investment, even amidst current market fluctuations.
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