Nvidia (NASDAQ: NVDA) set a record on January 27 — by losing roughly $600 billion in market capitalization. Nvidia stock dropped from $142.02 on Friday, January 24, to $117.21 by press time on January 28.
This steep decline was caused by the overnight success of DeepSeek — an open-source Chinese artificial intelligence (AI) model. Reportedly, DeepSeek utilized just $5.6 million to construct and train its newest line of models — and the comparatively ‘shoestring’ budget seems to have produced results on par with OpenAI’s flagship ChatGPT models, at least per early benchmarks.
So, why did Nvidia experience such a pullback? The situation has brought the high level of capital expenditures earmarked for AI into question — and worse still, the DeepSeek models didn’t even need to utilize the chipmaker’s latest line of products — as they fall under export restrictions.
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In the midst of a wider tech selloff that has hit semiconductor companies particularly hard, Wall Street seems unperturbed — at least for now. While investors are scrambling, mobilized by worries that Nvidia stock could crash below $100, equity researchers haven’t budged an inch by comparison — and have largely maintained the same outlook they had in late December of 2024.
Wall Street remains bullish on Nvidia stock — but that could change
At present, 39 analysts track Nvidia stock. A vast majority — 36, to be exact, deem it a ‘Buy’. Only 3 analysts have issued ‘Hold’ ratings — none have issued ‘Sell” ratings. The average price target set by these analysts evens out to $177.56 — a figure that represents a robust 46.98% upside.
However, that figure is subject to change — as more and more Wall Street firms get their bearings and begin to provide forecasts that reflect the effects of DeepSeek.
For instance, Morgan Stanley (NYSE: MS) analyst Joseph Moore recently cut his price target for Nvidia stock from $166 to $152 on January 28, citing investor concerns sparked by the release of DeepSeek’s AI model. Along with this, the analyst added that Morgan Stanley expects a meaningful upside in the second half of the year, as production and adoption of Nvidia’s new line of products ramp up.
In contrast, Citigroup (NYSE: C) researcher Atif Malik stood by a previously-set $175 price target — as did Cantor Fitzgerald’s C.J. Muse, who maintained an ‘Overweight’ rating with a $200 price forecast.
Readers should note that Wall Street’s general bullishness likely won’t change — the Jensen Huang-led venture is the clear leader in a competitive industry, has a robust backlog, and plenty of organic, healthy demand from a set of industries that are themselves vibrant and growing.
With that being said, equity analysts could very well moderate their expectations in the coming days and weeks, at least when it comes to the price targets they set. In addition, this is the first time that the U.S.-dominated AI industry has gotten a seemingly legitimate rival — and it is entirely possible that, if DeepSeek sees continued improvements, the outlook for Nvidia stock could slide even further.
Featured image via Shutterstock
