Nvidia Faces Headwinds Despite Strong Fundamentals
Nvidia (NVDA) has experienced a sluggish start to the year, with shares declining by 1%. This underperformance is attributed to several factors.
DeepSeek's AI Impact:
DeepSeek's unveiling of the AI model RI has raised concerns about overspending on AI infrastructure, including Nvidia chips. RI's lower cost of development has led to speculation about its potential impact on Nvidia's market share.
Competition from Big Tech and Other Chipmakers:
Amazon's partnership with Anthropic, Google's AI chip Willow, and advanced custom chips from Broadcom and Marvell are increasing competition in the AI chip market.
Analyst Outlook:
Despite the headwinds, analysts remain bullish on Nvidia. Evercore ISI's Mark Lipacis defends the stock, citing Nvidia's robust software ecosystem and dominant position in the hyperscaler market. Bank of America's Vivek Arya reiterates Nvidia as his top pick, expecting growth in data center sales and excitement from its upcoming GTC conference.
Street Sentiment:
Financial estimates for Nvidia have been revised upward, indicating that the market is not fully incorporating sector concerns. However, the recent news flow has dampened investor sentiment, which may be addressed during Nvidia's upcoming earnings call on February 26th.