Nvidia Shares Rebound After DeepSeek-Linked Sell-Off
Wednesday, Jan 29, 2025 2:51 am ET
3min read Nvidia shares surged Tuesday, rebounding from a sharp sell-off triggered by the emergence of Chinese AI startup DeepSeek and its low-cost AI model. The stock jumped nearly 8.8% on Tuesday, recovering from a 17% drop on Monday that wiped out $589 billion from the AI chip giant's market value. The rebound came as Wall Street analysts rallied to defend Nvidia, urging investors to seize this buying opportunity.
DeepSeek, a Chinese AI service, caused ripples Monday by claiming it built its advanced AI model for under $6 million, challenging industry heavyweights like OpenAI, Google, Microsoft, and Tesla. The announcement drew comparisons to "AI's Sputnik moment" by Marc Andreessen, but skepticism emerged about DeepSeek's reliance on Nvidia's Hopper GPUs, estimated at nearly $2 billion, and Meta's Llama models, which also demand significant investment.
Wedbush analyst Dan Ives dismissed the sell-off as an overreaction, labeling it a "golden buying opportunity." Tigress Financial's Ivan Feinseth upgraded Nvidia to "Strong Buy" with a 12-month price target of $220, citing the company's dominance in AI development and robust cash flow growth. He called the dip a strategic entry point for investors.
Morgan Stanley analyst Joseph Moore acknowledged DeepSeek's innovative approach but viewed its market impact as limited, noting Nvidia's strong pipeline with upcoming Blackwell GPUs. Moore, however, trimmed his price target to $152–$166, citing short-term demand softness due to delayed Hopper orders.
Despite Monday's 17% drop, Nvidia remains a cornerstone of the AI sector, with shares up 94% year-over-year. Analysts agree that Nvidia's leadership in AI infrastructure and continued innovation will drive sustained growth, positioning it to capitalize on the ongoing AI adoption wave across industries.
In conclusion, Nvidia shares have rebounded after the DeepSeek-linked sell-off, with analysts urging investors to seize the buying opportunity. The company's strong pipeline and continued innovation, along with its leadership in AI infrastructure, position it to maintain its market leadership and capitalize on the ongoing AI adoption wave across industries.
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