Do you have to buy NVIDIA shares after the Deepseek bombing? Here’s what Wall Street says.

There is a convincing argument that the latest developments in the field of artificial intelligence (AI) could be of great importance to the future. In the last few years he has been progressing in generative AI have helped feed a roaring bull market with promises to significantly increase productivity. The potential wind of increased profits causes companies to compete to accept these next -generation algorithms.

One of the largest beneficiaries of these secular queues is Nvidia (S)Nvda 8.93%))S The company Graphic processors (graphic processors)which were originally designed for game applications proved to be equally skillful to deliver the computing horse force required for AI. Healthy sales of these processors feed parabolic growth, sending NVIDIA stocks over 500% in the last two years.

However, Claims made by Chinese Starting Deepseek Threatened to upset the existing paradigm by sending nvidia in a queue. The action dropped 17% and lost nearly $ 600 billion in a one -day market cap. However, after a good dream, Wall Street has some thoughts on the matter.

Perspective is required

Edgar Allen on a famous one wrote: “Believe nothing you hear, and only half you see.” Wall Street seems to accept this approach with regard to some of the claims made by Deepseek. Consideably, he claims to have created his own chatbot for $ 5.6 million, they meet with skepticism from some analysts.

Bernstein Stacey Rasgon analyst wrote in a note to customers (accent of mine), “Deepseek” really “build Openai for $ 5 million? ” Of course not“The analyst suggested that many of the routine costs and the costs of development were left beyond the total number.” The DEPEPEEK R1 document did not quantify the additional resources required to develop the R1 model (probably they were essential), “he wrote.

Many investors panicked on Monday, fearing that more efficient AI models will mean a less business to NVIDIA, but this is probably not the case. According to the Jevons paradox, the effectiveness of the effectiveness of technological progress as a whole increase Search by reducing costs. In other words, AI models with a lower price will stimulate increased reception, which will increase the demand for NVIDIA AI centered processors.

Cantor Fitzgerald CJ Muse analyzer has taken a similar position: “Innovation is reducing the cost of receiving and making ubiquitous,” he writes. “We see this progress as positive in the need for more and more time calculations (not less).” This is good for NVIDIA.

Tigress Financial modernizes NVIDIA to Strong Buy on Tuesday and increased its price target to the street to the street $ 220. This is a potential increase for investors by 71% compared to the closing price on Tuesday. The analyst believes that the growth of the data center required to maintain AI will continue continuously and NVIDIA – which controls the dominant share of the GPU market of the data center – will continue to profit from this trend.

Even after the Deepseek bombing, Wall Street is almost universal behind NVIDIA. Of the 63 analysts who have offered an opinion so far in January, 94% estimate it no Recommend the sale.

This shows that Wall Street remains a remarkable NVIDIA scourge, despite the seemingly Deepseek development.

The opinion of the torturous fool

On January 27, a roundtable was held among fools analysts and they discussed the problems surrounding Deepseek’s message. From this conversation, several accents stand out:

• Panelists have repeated the question of whether it costs only $ 5.6 million to train Deepseek’s chatbot. A review of the White Paper provided by Deepseek seems to suggest that this includes only the cost of the most version and none of the development that precedes it.
• Deepseek AI assistant recently became # 1, downloaded free app of Apple Shop. However, there seems to be a mismatch between the number of downloads and the actual use of applications, which can question the truth of these statistics.
• These warnings aside, there is a potential that this is the natural evolution of technology. As resources become more detrimental, the focus will inevitably focus on innovation, breeding the next generation of progress.
• Even if this is a breakthrough in AI development, it will probably not reduce the need for NVIDIA’s state-of-the-art processors, as they will continue to play a decisive role in training AI models.
• The group as a whole agreed that the NVIDIA premium assessment would lead to increased instability, which will test investor skills.

Collectively, evidence shows that Depepeek’s bombing is more an inevitable evolution of technology than a major breakthrough.

These are still the early days of the AI ​​Revolution, and as such investors should expect more “bomb” developments in the area in the coming months and years. Some investors were scared of NVIDIA on Monday but had knee reaction to news Like this can be an expensive mistake.

Data from Ycharts

Finally, NVIDIA shares are currently sold for approximately 50 times profit. Although this may be enough to send value to the investors aimed at outputs this is far below the nvidia average Price-Profit Ratio (P/E) From 81 in the last five years, which has made it a relatively inexpensive historical point of view. In addition, the shares accumulated over 2000% during the same period, which illustrates why it is worthy of a premium.

Given the long experience of the company and the history of innovation, I still believe that NVIDIA is a valuable investment.