Stock is having its best month since May and has retraced more than 90% of what it lost during the DeepSeek dive
Shares of Nvidia Corp. notched another gain Tuesday, as investors have been given more reason to believe the perceived threat from DeepSeek’s artificial-intelligence platform is overblown.
BofA Securities analyst Vivek Arya said while Wall Street continues to debate the impact of China-based DeepSeek’s “overstated” claim of lower costs to develop AI, new plans to boost AI spending keep emerging.
Nvidia’s stock (NVDA) rose 0.4% on Tuesday and has climbed 6.9% amid a three-day win streak.
It has now retraced about 90% of the selloff it suffered after the DeepSeek threat first came to light – causing a 17% plunge in Nvidia’s stock on Jan. 27, and a total 18.2% dive through Feb. 3.
BofA’s Arya said global investors may have also missed the announcement last week at the AI Action Summit in Paris that the European Commission would invest 200 billion euros ($209.2 billion) on AI infrastructure, including 20 billion euros for AI gigafactories.
France also announced at the summit 109 billion euros in private investments into AI infrastructure and deployment projects.
Arya wrote in a Tuesday note to clients that these announcements out of Europe show there is “no discernible near/medium-term risk from any DeepSeek-related AI-model optimization.”
He reiterated his buy rating on Nvidia’s stock and his $190 price target, which implies about 35% upside from current levels.
And while DeepSeek raised some fears that, after rocketing 171% in 2024 and 239% in 2023, Nvidia’s stock may be overvalued, Arya wrote:
“Nvidia’s prowess as a ‘computing platform’ – versus chip-only peers – with consistent hardware/software optimization is ideally suited to the fast-changing AI environment, in our view.”
Nvidia’s stock has now gained 3.8% this year, while the PHLX Semiconductor Index SOX has rallied 5.4% and the S&P 500 index SPX has advanced 4.2%.