Nvidia Stock: Analysts Defend Amidst Market Weakness
Nvidia (NVDA) investors face an atypical market beginning, with shares declining by 1% year-over-year and underperforming the S&P 500 (^GSPC) by 5% in recent weeks.
Reasons for Weakness
According to Evercore ISI analyst Mark Lipacis, the following factors have contributed to Nvidia's underperformance:
* DeepSeek AI: Competition from DeepSeek's cost-effective AI model, RI, has raised concerns about AI infrastructure overspending.
* AI Compute Shift: DeepSeek's model utilizes ASICs instead of Nvidia GPUs, potentially shifting market share.
* Blackwell Chip Delays: Production setbacks have hindered the release of Nvidia's Blackwell chip.
Bullish Outlook
Despite these concerns, Lipacis recommends purchasing Nvidia shares ahead of its earnings report on Feb. 26. He maintains an "Outperform" rating and a price target of $190, citing Nvidia's strong ecosystem and market leadership.
Competition Intensifies
However, Nvidia faces increasing competition from:
* Amazon (AMZN): Partnership with Anthropic to enter the AI chip space.
* Google (GOOG): Development of its own AI chip, Willow.
* Broadcom (AVGO): Advanced custom chip releases.
* Marvell (MRVL): Enhanced custom chip offerings.
Analyst Sentiment
Despite unfavorable news, analysts remain optimistic about Nvidia's long-term prospects. Bank of America's Vivek Arya reiterated its "top pick for 2025" recommendation, forecasting 57% upside potential.
Arya expects Nvidia to address concerns regarding Blackwell execution, growth projections, and upcoming announcements at its GTC conference.
Financial Estimates
Market expectations for Nvidia's future financial performance remain positive. Yahoo Finance data indicates upward revisions to earnings and EPS estimates for 2025 and 2026.