Following Nvidia's Price Drop: Top Analyst Suggests 55% Price Increase Potential – An Opportune Moment to Invest
In a rollercoaster week, Nvidia's stock plunged by up to 20 percent. The culprit? DeepSeek, the new Chinese chatbot sensation. But what does this mean for Nvidia's future? Turns out, not all doom and gloom according to top analyst, C.J. Muse.
DeepSeek, touted as the "Chinese ChatGPT," surged in popularity, pushing Nvidia's go-to AI stock into a tailspin. So, what makes DeepSeek special? It's a pocket-friendly powerhouse, reportedly working with less powerful chips and requiring fewer data—a potential game-changer for the market.
Even though Nvidia's dominant position in the AI sector is under question, some argue that the dependency on pricey Nvidia chips might drive demand for cheaper alternatives. But C.J. Muse from Cantor Fitzgerald begs to differ.
He dismissed the idea that DeepSeek heralds the era of affordable, resource-light AI. In a recent assessment, Muse described such concerns as "unfounded." He posits that the rapid advancement of General Artificial Intelligence and the Jevons paradox could lead to increased demand for computing power, rather than a decrease.
The Jevons paradox states that technological efficiency improvements often result in increased consumption rather than decreased use—a concept that seems to resonate with Muse. He emphasizes that the AI sector will likely need more powerful computing solutions moving forward, not fewer.
As for DeepSeek's claims of utilizing fewer resources, Muse doubts its actual infrastructure requirements. While DeepSeek suggests using only 10,000 A100 chips, rumors circulate about up to 50,000 Hopper GPUs being used instead. If true, DeepSeek's seeming cost-effectiveness might not be quite as revolutionary.
Despite the uncertainties, Muse remains optimistic about Nvidia's prospects. He considers the DeepSeek setback as an opportunity for investors, predicting that long-term demand for Nvidia chips will continue to increase. With a $200 price target on Nvidia stock, Muse foresees an upside potential of around 55 percent.
In short, even though DeepSeek might shake up the market, analyst C.J. Muse believes that Nvidia still reigns as a prominent player in the AI sector. His optimistic outlook, backed by Nvidia's robust performance in AI and data centers, might provide investors with encouragement.
Pro aside: DeepSeek Storm:In the midst of DeepSeek turmoil, Cathie Wood struck swiftly at the tech giant.
Disclosure:Boersenmedien AG, board and majority shareholder, have direct and indirect positions in financial instruments mentioned in the publication, which could profit from potential price fluctuations resulting from the publication: Nvidia.
Additional Context:According to C.J. Muse's analysis, Nvidia's strong fundamentals, such as its diversified growth drivers and robust performance in AI and data centers, are positive indicators for the stock. Moreover, he expressed confidence in Nvidia's long-term prospects, citing the ramp-up of the Blackwell architecture and expected AI spending durability. These factors contribute to Cantor Fitzgerald's $200 price target and expectations for strong earnings through 2026.
Source: Boersenmedien AG [Asset Id: 291636]
- C.J. Muse, the top analyst from Cantor Fitzgerald, asserted that the rapid advancement of General Artificial Intelligence and the Jevons paradox could result in increased demand for computing power, rather than a decrease, which may continue to drive demand for Nvidia chips.
- Despite DeepSeek's potential as a cheaper AI alternative, Muse questioned its actual infrastructure requirements, as rumors suggest up to 50,000 Hopper GPUs might be in use instead of the reported 10,000 A100 chips, potentially making it less cost-effective compared to Nvidia's offerings.
