Nvidia's stock has seen significant volatility, particularly following the announcement of DeepSeek's cost-effective AI model, which has shaken investor confidence across the tech sector. Earlier this week, Nvidia (NASDAQ: NVDA) faced the largest single-day market cap decline recorded, dropping approximately $589 billion on January 29, 2025. This dramatic drop sent shockwaves through Wall Street, leading to fears about the company's future with the competitive threat posed by DeepSeek, a Chinese AI startup.
On January 29, Nvidia's market cap plummeted as the DeepSeek announcement made headlines. Some analysts expressed concern over the financial viability of Nvidia's business model, particularly relating to their graphics processing units (GPUs), which have become central to the AI infrastructure. Investor anxiety was exacerbated by the fact DeepSeek was using older Nvidia chips at significantly reduced training costs to develop its latest AI model.
Nonetheless, Nvidia’s stock made strides to recover within 24 hours, rebounding nearly 9%. Investors seized the opportunity to buy shares at what they perceived to be discounted prices. Following this recovery, analyst Ivan Feinseth from Tigress Financial upgraded Nvidia’s rating from Buy to Strong Buy, increasing his price target from $178.32 to $220. This revised target reflects potential upside of approximately 78% over the next year.
Feinseth remarked on the uncertainty surrounding DeepSeek's model, which, albeit built on older Nvidia technology, provides unknown future capabilities and poses security concerns. He maintained optimism about Nvidia’s stature within the AI domain, emphasizing its role as the leading supplier of AI-driving GPUs—a position he argued will help Nvidia benefit from long-term growth opportunities within the AI market.
Compounding matters, other analysts weighed in on the competitive climate stirred by DeepSeek. On January 30, JPMorgan’s Harlan Sur raised doubts about the reported low costs associated with DeepSeek’s AI model. He stressed, “We believe it is important to validate these costs before drawing conclusions.” He noted the nuances of DeepSeek utilizing Meta’s open-source Llama AI model, implying this model's development may not be sustainable long-term without substantial computational resources, which U.S. firms likely possess.
Rich Ross, head of technical analysis at Evercore ISI, also commented on the situation, noting, “If you started to see meaningful weakness in Nvidia, I think it would be overly optimistic to think the market will just continue to shrug off.” His analysis highlights the importance of monitoring Nvidia’s momentum across the Sector.
Technical analysts have been particularly attuned to Nvidia's stock performance concerning its 200-day moving average. This metric is viewed as significant by traders, serving as either support or resistance. It was reported late last week how Nvidia’s stock was hovering near this pivotal level after having closed above it for three consecutive sessions. Still, analysts caution against the importance of staying above this benchmark to avoid triggering more selling pressure.
Data indicates Nvidia remains about 15% below its record high. A sustained position above the 200-day moving average could signal bullish momentum, whereas slipping below could indicate looming bearish trends. Andrew Thrasher, another technical analyst, expressed similar sentiments, warning about potential supply pressure should Nvidia fail to hold its ground.
Beyond the immediate concerns about stock performance lies the future of Nvidia as it continues to innovate and introduce cutting-edge technologies. At the recent CES 2025 tech show, the company unveiled the GB10 superchip, showcasing its potential advancements which merge CPU and GPU technologies tightly. Nvidia’s endeavors also reflect its intentions to stay competitive amid rising AI investments projected to exceed $330 billion by 2025.
Feinseth sees healthcare and life sciences as strategic growth sectors for Nvidia, where AI technology can transform patient care and drive biomedical research forward. These areas are expected to benefit significantly from AI-driven data solutions, which Nvidia is uniquely positioned to offer.
Despite the recent turbulence, Nvidia maintains strong ratings on Wall Street, with 37 Buy ratings and just 3 Hold ratings. The average price target, as previously noted, remains promising at $178.32, indicating continued optimism among investors about Nvidia’s path forward.
With strong backing from analysts, future innovations, and strategic investments expected to yield significant returns, Nvidia remains firmly entrenched as one of the leading players shaping the future of AI technology.