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Nvidia (NVDA) is a world leader in artificial intelligence (AI), gaming, visualization technology, and accelerated computing. The company is well known for making graphics processing units (GPUs) for the PC gaming market and high-performance computing. Founded by CEO Jensen Huang, the company is also heavily involved in developing autonomous vehicles, data centers, robotics, and edge computing.
About Nvidia Stock
Nvidia has made massive gains in recent years taking on a central role in the AI boom. Its stock is up 76% over a 52-week period and more than 1,800% in the last 5 years. But despite the gains, it is facing pressure this year, losing 13% in the year to date. Shares are down roughly 25% from their 52-week high of $153.13 set in early January. The company recorded a loss of approximately $600 billion in market capitalization on Jan. 27 in a selloff triggered by China’s AI startup DeepSeek.
Nvidia and DeepSeek
In late January, Chinese company DeepSeek announced its AI models DeepSeek-V3 and DeepSeek-R1. Both are open-source, chat-based AI models that rival OpenAI’s ChatGPT. The models quickly gained popularity because of their cost-efficiency; the company was able to design the models at a fraction of the cost without having to compromise on performance.
The announcement led to a widespread crash in the U.S. stock market on Jan. 27, with Nvidia and its Big Tech peers feeling the heat. With the huge selloff, investors are now pondering whether to buy the dip on Nvidia and other chip stocks or not. Many believe the stock might not be available for purchase at this level again, making it a bargain buy, while some believe DeepSeek will be a long-term issue for Nvidia and the market could slip further.
As such, Mizuho analyst Jordan Klein says that he won’t be buying the dip in chip stocks while also saying that he won’t be selling any stocks either amid the panic. The analyst believes the market to be “crowded” at the moment and says it could take time to see the full damage of the DeepSeek panic. However, he feels that that the recent selloff was an overreaction stating that while DeepSeek has successfully trained its AI model, inferencing is a different matter altogether.
Inferencing is the process by which a trained AI model can conclude new, unseen data, such as analyzing a picture and concluding whether the picture contains a cat or a dog.
Nvidia’s Solid Results
Nvidia reported its third-quarter results for its fiscal 2025 on Nov. 20, 2024. The company posted a net profit of $19.31 billion, translating to a profit of $0.81 on a non-GAAP diluted per share basis, beating analysts’ $0.75 per share estimates. On the revenue side, it posted a 94% rise year-over-year to $35.08 billion, surpassing Wall Street’s $33.33 billion estimate.
Its revenue from data centers peaked at a record $30.8 billion, up 112% from the same quarter last year. The company operated with a gross margin of 74.6%, down from 75.1% reported in the previous quarter, while operating expenses increased to $4.2 billion from $2.9 billion reported in the same quarter last year. In the end, its cash balance stood at $38.49 billion, up from $25.98 billion reported in January 2024.
Management also posted their fourth-quarter guidance where revenue is expected at $37.5 billion at the midpoint, GAAP gross margin to be at 73%, and operating expenses at $4.8 billion.
Analyst Rating on NVDA
Analysts continue to have a bullish stance on Nvidia, with a consensus “Strong Buy” rating. The stock has a mean price target of $178.09 reflecting roughly 52% upside potential from current prices. The stock is being covered by 43 analysts, with 37 “Strong Buy” ratings, two “Moderate Buy” ratings, and four “Hold” ratings.
