Aswath Damodaran, a finance professor known for his expertise in valuation, has set a stock price target of $78 for Nvidia, suggesting a potential 37% drop from its current levels. His analysis is influenced by the emergence of a Chinese startup, Deepseek, which claims to have developed advanced AI applications at a much lower cost than competitors like OpenAI. Damodaran suggests this could commoditize the AI chip market, affecting Nvidia’s valuation and growth prospects.
However, the article addresses skepticism around Damodaran’s bearish outlook. It points out that major tech companies, including Microsoft and Amazon, continue to rely on Nvidia’s products and are investing in AI infrastructure, indicating strong ongoing demand for Nvidia’s chips. While concerns about a slowdown in Nvidia’s growth are valid, the current landscape suggests that big tech’s commitment to Nvidia remains solid.
The article ultimately argues that Nvidia’s stock may decline ahead of its revenue report on February 26, but views any such decline as a buying opportunity, predicting a potential recovery in the stock price as demand for Nvidia’s chips continues.
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