DeepSeek's New AI Model May Impact Nasdaq Stocks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy NVDA?
Source: CNBC
- Market Turbulence Warning: The imminent release of a new model by China's DeepSeek could put pressure on Nasdaq stocks, reminiscent of last year's launch when the Nasdaq Composite fell 3% and Nvidia's stock dropped nearly 17%.
- Cost and Time Advantage: DeepSeek claims it took only two months and less than $6 million to develop the new model, raising questions about the U.S.'s AI leadership and the massive spending by Big Tech on data centers.
- Market Reaction Analysis: Following last year's DeepSeek release, semiconductor stocks were particularly hard hit, with the VanEck Semiconductor ETF dropping nearly 10% and failing to recover in the weeks that followed, indicating the market's sensitivity to new technologies.
- Increased Uncertainty: The current market is fragile, with investors also weighing Trump's tariff policy changes and the potential for conflict with Iran, while Nvidia's upcoming earnings report adds to the uncertainty, leading to a drop of over 700 points in the Dow Jones Industrial Average on Monday.
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Analyst Views on NVDA
Wall Street analysts forecast NVDA stock price to rise
41 Analyst Rating
39 Buy
1 Hold
1 Sell
Strong Buy
Current: 191.550
Low
200.00
Averages
264.97
High
352.00
Current: 191.550
Low
200.00
Averages
264.97
High
352.00
About NVDA
NVIDIA Corporation is a full-stack computing infrastructure company. The Company is engaged in accelerated computing to help solve the challenging computational problems. The Company’s segments include Compute & Networking and Graphics. The Compute & Networking segment includes its Data Center accelerated computing platforms and artificial intelligence (AI) solutions and software; networking; automotive platforms and autonomous and electric vehicle solutions; Jetson for robotics and other embedded platforms, and DGX Cloud computing services. The Graphics segment includes GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems, and Omniverse Enterprise software for building and operating industrial AI and digital twin applications.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Market Reaction: BNP Paribas anticipates a 'classic beat/raise' for the quarter but does not expect significant market-moving news until the GTC conference in March, suggesting investors should focus on future product announcements.
- Product Line Expansion: Analyst Jeff Pu expects Nvidia to launch a language processing unit (LPU) at the GTC event to enhance its inferencing product portfolio, along with a potential CPO for scale-out switches, demonstrating the company's ongoing innovation in the AI sector.
- Industry Impact: Despite Nvidia's consistent earnings beats over the past two years and a stock price increase of over 48% in the last year, concerns about its slowing growth rate may affect the stock performance of other semiconductor companies.
See More
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- Export Approval Status: Although the Trump administration granted Nvidia approval to export its H200 chips to China last December, Commerce Assistant Secretary David Peters stated that no shipments have occurred yet, highlighting the complexities and potential delays in the export process.
- Chinese Market Preparation: Chinese officials have allowed major tech companies like Alibaba, Tencent, and ByteDance to prepare orders, with expectations of hundreds of thousands of H200 chips being ordered, indicating strong demand for AI chips in the Chinese market.
- National Security Considerations: Trump noted on social media that the export conditions would ensure continued strong national security for the U.S., reflecting that national security remains a critical factor in U.S.-China trade relations.
- Market Reaction Expectations: Despite the order preparations, the delay in chip shipments may impact Nvidia's market performance, particularly as investors closely watch its upcoming earnings report for performance expectations.
See More
Nvidia's H200 Chip Sales Approved Under Conditions
- Sales Approval Update: U.S. President Trump has formally allowed the sale of Nvidia's H200 chips to China under specific conditions, although Blackwell chips remain banned for export, potentially opening new market opportunities for Nvidia in China.
- Export Compliance Issues: While the H200 chip sales have been approved, Nvidia's Blackwell chips are still subject to export bans, and reports suggest that Chinese AI startup DeepSeek's latest AI model may have violated U.S. export laws by utilizing Blackwell chips for training.
- Optimistic Earnings Expectations: Analysts anticipate that Nvidia will report a 67% year-over-year revenue increase to $65.69 billion in its upcoming Q4 2025 earnings report, with earnings per share expected to rise from $0.89 to $1.53, indicating strong market demand.
- Market Sentiment Analysis: Despite NVDA shares surging approximately 48% over the past year, investor sentiment on Stocktwits has remained in the 'bearish' territory over the last 24 hours, reflecting concerns over future sales and developments in the Chinese market.
See More
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- Stock Surge: AMD's stock rose by 8.81% to close at $213.84, driven by a multi-year AI chip deal with Meta, which is expected to significantly enhance its data center market share against Nvidia.
- Volume Spike: Trading volume reached 79.8 million shares, about 120% above the three-month average, indicating strong investor interest in AMD's growth potential, which may further boost its stock price.
- Strategic Partnership: Under the agreement, Meta will acquire 6 gigawatts of GPUs from AMD to support its AI infrastructure, and AMD will grant Meta performance-based warrants for up to 160 million shares, solidifying their partnership.
- Enhanced Competitive Edge: This deal highlights that despite competing with sector leader Nvidia, the robust demand for AI hardware from Meta provides AMD with strong market support, signaling promising growth prospects ahead.
See More
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- Rising Tensions: Apple CEO Tim Cook learned during a 2023 CIA briefing in Silicon Valley that China could act on Taiwan as early as 2027, which has heightened concerns among executives regarding geopolitical risks.
- Market Response: In prediction markets, a contract asking if China will invade Taiwan by the end of 2026 is priced at 10% with over $9 million in volume, indicating significant investor attention on this potential conflict.
- Supply Chain Vulnerability: Taiwan Semiconductor Manufacturing Co. (TSMC) fabricates approximately 90% of the world's advanced semiconductors, and losing this supply could cost the U.S. GDP $2.5 trillion and over $10 trillion globally, highlighting the critical dependency on Taiwan.
- Investment Ineffectiveness: Despite the U.S. injecting $52 billion in subsidies through the CHIPS Act and announcing $640 billion in semiconductor investments, the domestic chip production share remains at 10%, failing to reduce reliance on Taiwan, indicating limited effectiveness of these policies.
See More
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- Market Rebound: Ahead of Trump's State of the Union address and Nvidia's earnings report, the strong performance of the software and chip sectors has led to a market rebound, indicating a gradual recovery in investor confidence towards tech stocks.
- Investor Sentiment Improvement: As anticipation builds for upcoming earnings reports, investor sentiment has notably improved, particularly in the software and semiconductor sectors, reflecting optimistic expectations for future growth in the market.
- Nvidia Earnings Impact: Nvidia's forthcoming earnings report is viewed as a bellwether for the industry, with widespread expectations that its performance will exceed forecasts, further driving up related stocks and invigorating the overall market.
- Policy Influence: Trump's State of the Union speech may address policy support for the tech sector, which investors are keenly watching, believing it will provide positive signals for future market performance.
See More
