Nvidia (NASDAQ: NVDA) is set for its worst trading day in recent history.
On Friday, January 24, Nvidia stock closed at $142.62 but by press time on January 27, the price of an NVDA share had crashed to as low as $125.96 in the pre-market trading session, bringing year-to-date (YTD) losses up to 6.20%.
The 11.68% loss came as a result of a ‘crisis of faith’ when it comes to high artificial intelligence (AI) capital expenditures. On January 10, Chinese AI startup DeepSeek released its AI assistant app. Then, on January 20, it released its latest line of large language models (LLMs), including DeepSeek-R1 and DeepSeek R1 Zero.
Picks for you
By January 27, it had become the top-rated free application in the United States — surpassing even OpenAI’s ChatGPT. Herein lies the meat of the matter — per early benchmarks, DeepSeek’s models provide a level of performance comparable to Western competitors — at a fraction of the cost. The developers also claimed that the models were trained using Nvidia’s last-generation H800 GPUs — and that the total cost of development was only $5.57 million.
Understandably, markets reacted by enacting a semiconductor selloff — and Nvidia, the chief provider of cutting-edge AI chips, was among the companies that suffered the most.
However, two equity analysts from some of Wall Street’s premier firms have maintained their bullish outlook in the face of this new development.
Citi and Cantor Fitzgerald analysts maintain bullish stance on Nvidia stock
On Monday, January 27, Citigroup (NYSE: C) researcher Atif Malik reaffirmed a prior ‘Buy’ rating on Nvidia stock, with an unchanged price target of $175. If met, Malik’s forecast would imply a 38.93% upside from current prices.
In a note shared with investors, the analyst expressed skepticism surrounding DeepSeek’s cost advantage and suggested that advanced GPUs likely played a role in building and fine-tuning the startup’s models. In addition, Citigroup believes that U.S.-based AI companies have an inherent advantage, owing to unobstructed access to cutting-edge chips.
Finally, Malik opined that recent capital expenditure announcements, such as Project Stargate, and the fact that advanced GPUs provide better value for AI companies at scale will serve to shield Nvidia from any major disruptions going forward.
Many of these sentiments were also echoed by C.J. Muse of Cantor Fitzgerald — who reiterated an ‘Overweight’ rating with a $200 price target, which equates to a 58.78% upside. In fact, Cantor considers this development to be bullish for Nvidia — as it will encourage more widespread usage of AI which will ultimately lead to higher compute demand.
Featured image via Shutterstock
