NVIDIA (NASDAQ:NVDA) shares bounced back strongly Tuesday following Monday’s DeepSeek-related sell-off, which whipped out a record $589 billion in market value in the AI chip giant. Shares of NVIDIA closed up 8.8% as analysts across Wall Street came out to defend the stock, and investors bought the dip.
Wall Street analysts called upon NVIDIA investors to take a “DeepBreath,” with some labeling China’s AI phenom as a “DeepFake.”
DeepSeek sent shockwaves in the industry Monday after it claimed to have built its AI model for less than $6 million, versus the billions spent by OpenAI, Google (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Tesla (NASDAQ:TSLA), and others. Famed investor Marc Andreessen called it “AI's Sputnik moment.” However, others claim DeepSeek relied on 50,000 NVIDIA Hopper GPUs, which would cost nearly $2 billion. Further, DeepSeek refined its technology using Meta (NASDAQ:META)'s Llama models, which also cost billions.
Wedbush analyst Dan Ives sees the DeekSeek sell-off as a “golden buying opportunity.” “DeepSeek fear across the tech world as in essence a "tech AI head fake" that will be short lived as more details and analysis comes out about DeepSeek's model and China resources (HK:0291),” Ives commented.
Tigress Financial Partners analyst Ivan Feinseth upgraded NVIDIA to ‘Strong Buy’ following Monday’s sell-off. "We upgrade our investment rating from Buy to Strong Buy and increase our 12-month target price to $220 as NVDA continues to be a core holding in the powerful AI investing theme and the industry-leading beneficiary of the significant capital investment in AI development driving the ongoing acceleration of AI adoption across all industries and enterprises, which will continue to drive significant revenue and cash flow growth and greater shareholder value creation and view yesterday’s selloff as a major buying opportunity,” Feinseth commented.
Elsewhere, Morgan Stanley (NYSE:MS) analyst Joseph Moore was a little less sanguine. He said, “[t]he DeepSeek release highlights evolutionary innovations in AI, some of which may be deflationary.” That said, he said the market’s reaction to DeepSeek's release was “surprising.”
Moore doesn’t see the DeepSeek news changing spending behavior for everyone in AI. “By all accounts the DeepSeek technology is impressive technology and will be a viable competitor, but does not seem to be impacting the planning process,” the analyst said. Given the DeepSeek situation and that demand drivers for NVIDIA this quarter and next continue to be somewhat lackluster due to Hopper orders slowing as customers wait for Blackwell, the analyst lowered his price target on NVIDIA to $152 to $166. That said, the analyst believes the underlying demand for NVIDIA Blackwell - and other AI products – “remains very strong.”
NVIDIA shares are down 4% year-to-date following Monday's 17% drubbing but remain up 94% over the last year.