Nvidia sharing is no longer bulletproof as there is a risk of Deepseek remaining
(Bloomberg) – Investors at Nvidia Corp. are usually in a hurry to buy stocks at any dip. However, the mood has been different since the Deepseek-led defeat, indicating that the fear of slowing down AI spending has not disappeared.
Most of them read from Bloomberg
Nvidia’s stock slumped to 17% in one day, eliminating roughly $590 billion from the company’s market capitalization after a Chinese AI startup claimed low-cost and high performance. Stock has since regained some ground, but is more than 12% below its January record high. It plans to total capital expenditures of $300 billion from its major customers, Amazon.com Inc., Alphabet Inc., Meta Platforms Inc. and Microsoft Corp.
DIP buyers did not intervene until Nvidia’s stock fell more than 21% from its peak. It specifically points to the increased attention of investors regarding AI spending, as Deepseek claims to use less chips in its AI model.
“There’s this fundamental concern about when the party will end. I think Deepshek is a morning-up call that might be faster than people think.” “Psychology within a day is essentially We have moved from an inexplicable bulletproof story to a story that could turn into a vicious one.”
Nvidia’s shares fell 2.8% in early trading on Wednesday.
Negative sentiment has generated a very different setup for Nvidia’s revenues scheduled for February 26th. Almost all quarterly reports from the past two years are actively projected, with stocks trading at record highs prior to the results. This time, the company needs to convince investors who may have begun to doubt how much more the stock could be done.
Read: Big Tech’s grip in the market shows cracks as revenues become flat
“The negative inventory response becomes the story, and in many ways frames the biggest risks from here,” an analyst at Morgan Stanley led by Joseph Moore wrote in a memo last week. As investors’ feelings got worse, they said, “The irony is overwhelming. It’s still unclear whether revenue acceleration can alleviate that concern. We think we can do that, but that remains a debate.”
As Nvidia appears in past quarters, exponential growth is seen and comparisons from the previous year are becoming difficult, wobbling over investor confidence. Estimates compiled by Bloomberg show that the company is expected to report revenue growth of 73%, down 73% from 94% in the last quarter, down significantly from 265% growth in the same period last year.
Of course, some people view Nvidia’s sharing negativity as an opportunity to buy. Analysts at Evercore ISI, led by Mark Lipacis, added a tactical outperform rating before the results, saying Deepseek’s sale will create opportunities. And about two weeks before the results, the stocks could certainly constitute a lost ground.
Read: AI is a major revenue focus for our company, far beyond big technology
Seller-off may also have made Nvidia’s valuation more appealing to some investors. Stocks are currently trading at about 30 times the advance revenue, compared to their five-year average multiple of 40 times more.
Still, stocks look more volatile than the outcome, as DIP buyers are not in a huge hurry. Especially when the bar investors don’t have the company’s revenues as unprecedented.
If Nvidia is disappointed, Ivana Delevska, Chief Investment Officer at Spear Invest, added that concerns about Nvidia’s Blackwell chips also put investors in place.
The expected new lineup rollout was slowed down due to manufacturing challenges and supply constraints. Cost concerns remain despite the company saying Blackwell will drive growth amidst strong demand.
“People are already a bit nervous about Blackwell. Management says it’s going well and everything’s great, but for some reason people aren’t sure it’s that,” Derebska said. Ta. “That’s probably why I haven’t seen the stock bounce back until they report it.”
The day’s technical chart
Meta’s stocks were lower on Wednesday, bringing the social media giants back on track to a record 17 session streak. The rally also has the market value of Facebook owners approaching $2 trillion so far.
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