Institutional Investors Show Interest in Nvidia Despite Retail Sell-Off

Overview:

Institutional investors appear to be accumulating Nvidia (NVDA) shares amid a decline in retail purchases. While retail investors have reduced their exposure to Nvidia and the 2X Bull Nvidia ETF, the company's share price has rebounded, indicating potential support from "smart money."

Institutional Buying:

Vanda Research data suggests minimal recovery in institutional option flows, but the recent increase in Nvidia's share price hints at underlying institutional buying. This activity could indicate confidence in the stock and the broader AI sector after analysts have assessed the impact of DeepSeek's launch.

DeepSeek's Impact:

Concerns arose that DeepSeek's AI model, RI, could threaten Nvidia's AI growth. However, analysts believe that DeepSeek's lower training costs may not significantly impact AI's overall growth trajectory.

Analyst Outlook:

Ahead of Nvidia's earnings release on February 26th, analysts maintain a bullish stance on the stock. Evercore analyst Mark Lipacis cited Nvidia's competitive advantage in hyperscale customer platforms and the strength of its software ecosystem. Bank of America's Vivek Arya reiterated Nvidia as a top pick for 2025 with a $190 price target.

Retail Shift:

As retail investors exit Nvidia, they are gravitating towards Palantir (PLTR), which has seen record retail demand of $339 million. This surge in demand coincides with insider selling, which could pose a risk to the stock if retail investors disengage and insiders continue to trim their holdings.

Conclusion:

Institutional investors appear to be taking advantage of the recent Nvidia sell-off by retail investors. The company's share price rebound suggests support from "smart money" despite concerns about DeepSeek's impact on AI demand. Analysts remain optimistic about Nvidia's long-term prospects, with positive expectations for its upcoming earnings release.