Nvidia (NVDA) Shares Lag Major Indices Amidst AI Competition

Shares of Nvidia (NVDA) have declined by 3.3% year-to-date, underperforming major US indices. In the past month, the stock has trailed the S&P 500 by 9%.

Reasons Behind Underperformance

According to EvercoreISI analyst Mark Lipacis, the weakness stems from three primary factors:

* DeepSeek: DeepSeek's AI model, RI, has raised concerns about overspending on AI infrastructure, potentially impacting Nvidia's chip demand.
* Shift from GPUs: DeepSeek's model utilizes ASICs instead of Nvidia's GPUs for AI computations.
* Blackwell Chip Delays: Delays in Nvidia's Blackwell chip have contributed to investor unease.

Analyst Recommendations

Despite the concerns, Lipacis maintains a "Buy" rating and a $190 price target for Nvidia. He believes the company remains a leader in the AI platform space, with its strong software ecosystem and development community.

Competition in AI Chip Space

Nvidia faces competition from Big Tech companies such as Amazon, which has partnered with Anthropic, and Google, which has released an AI-powered supercomputer. Additionally, Broadcom and Marvell have introduced advanced custom chips.

Bank of America's Outlook

Bank of America analyst Vivek Arya remains bullish on Nvidia, citing potential positive catalysts in the upcoming earnings call. Arya projects 60% year-over-year growth in data center sales by fiscal year 2026, with further excitement expected at the GTC conference in March.

Analysts' Estimates

Despite sector concerns, analysts have revised Nvidia's 2025 and 2026 EPS estimates upwards in the past 30 days, indicating a positive outlook.