Nvidia Bulls Remain Optimistic Ahead of Earnings Despite AI Cost Concerns

Nvidia (NVDA) bulls are holding their ground as the chipmaker approaches its earnings report next week. Despite concerns raised by DeepSeek's AI cost analysis, some analysts remain positive on Nvidia's prospects. However, they caution against overly optimistic first-quarter expectations.

According to Loop Capital analyst Ananda Baruah, Nvidia's long-term outlook appears promising. He reiterated a $175 price target, implying 25% upside from current levels. Baruah believes Nvidia's GPU sales to hyperscalers will increase significantly as they seek to expand their non-CPU compute capabilities.

However, Evercore analyst Mark Lipacis strikes a cautious tone. He cites three reasons for concern: DeepSeek's impact on AI demand, the shift towards ASICs, and delays with Nvidia's Blackwell chips.

DeepSeek's recent announcement of RI, a ChatGPT-like AI model with a lower cost of development, has raised concerns about potential overspending on AI infrastructure. BofA analyst Vivek Arya acknowledges the potential headwinds facing Nvidia's first-quarter outlook, including the Blackwell transition, Hopper declines, and China restrictions.

Despite these concerns, Wall Street remains largely bullish on Nvidia ahead of its earnings report. Arya remains optimistic about Nvidia's future, with a $190 price target and expectations for continued momentum driven by new product introductions and market expansion.

However, investors should temper their near-term expectations and monitor the market closely following the earnings release. The Street's EPS estimates for the first quarter have declined slightly over the past month, and 2025 EPS estimates have remained stagnant for over 60 days.