Nvidia Share Price: Just as the world's largest AI behemoth, Nvidia had created history by recording the highest single-day gains on Wall Street last year, the same AI darling also witnessed the biggest single-day losses in the history of the US Market on Monday, January 27. 2025. Selling in Nvidia was like a whirlwind, pushing the stock to lose up to $600 billion market. The reason for the frenzy was one Chinese app called DeepSeek!
Nvidia Share Price:
Nvidia was the worst performer on Wall Street on Monday, freefalling by over 18% to hit an intraday low of $116.70 apiece. More than $600 billion of market cap was wiped out in Nvidia.
After the closing bell, Nvidia stock ended at $118.58 apiece, down by 16.86% on Nasdaq, with a $592.74 billion market cap loss. Owing to this extreme bearish runover, Nvidia erased its $3 trillion mark in m-cap.
Now, Nvidia holds a market cap of $2.9 trillion, falling two places to hold the third most-valued company title, after Microsoft and Apple Inc.
The Reason For Erosion In Nvidia Stock?
Investors lost faith in Nvidia on Monday due to the gaining popularity of Chinese AI startup DeepSeek, which reportedly is seen as a formidable competitor to the American giant.
A Forbes report cited Ed Yardeni of Yardeni Research, which said, the release of DeepSeek's large-language model, which shook confidence in U.S. dominance in generative AI, may initially not seem like a negative catalyst for Nvidia, considering DeepSeek's model was trained on Nvidia's GPUs, like most other advanced AI programs. But the Chinese company said it spent just $5.6 million on Nvidia technology to develop its large-language model, and though experts speculate this is a gross underestimate, it still upsets the core thesis behind Nvidia stock's meteoric rise. The report further added, "If big U.S. tech companies "can learn from DeepSeek to design AI systems with cheaper GPUs...it might not be a happy development for Nvidia."
During Q3FY25, Nvidia earned a record quarter revenue of $35.1 billion, up 17% from Q2 and up 94% from a year ago. While recording quarterly Data Center revenue of $30.8 billion, up 17% from Q2 and up 112% from a year ago. Currently, Nvidia is a world leader in artificial intelligence (AI) hardware and software. Nvidia outsources the manufacturing of the hardware it designs. Also, holding a market share of 80.2%, Nvidia is a leader in discrete desktop GPUs by a wide margin.
NVIDIA expects Q4FY25 revenue to be at 37.5 billion, plus or minus 2%, while GAAP and non-GAAP gross margins are expected to be 73.0% and 73.5%, respectively, plus or minus 50 basis points.
Despite the latest downfall in share price, Nvidia commented saying DeepSeek's R1 model is an "excellent AI advancement". A Nvidia spokesperson reportedly said that DeepSeek is a perfect example of Test Time Scaling.
What Should Investors Do In Nvidia Stock?
Brokerage UBS is still confident in Nvidia stock despite the entry of DeepSeek. The global brokerage believes Nvidia could report a strong fourth quarter for FY25, and has the ability to offer solid first-quarter guidance for fiscal 2025-26.
Also, as per Trendlyne data, the consensus recommendation from 63 analysts for NVIDIA Corp is STRONG BUY. Of the total, 47 analysts have recommended STRONG BUY 12 analysts have suggested BUY, while the rest have recommended HOLD but none have said to SELL. EPS is expected to grow by 138.7% in FY25.
Moreover, TipRanks data showed that based on 39 Wall Street analysts offering 12-month price targets for Nvidia in the last 3 months. The average price target is $177.56 with a high forecast of $220.00 and a low forecast of $135.00. The average price target represents a 24.50% change from the last price of $142.62.
Disclaimer: The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on article mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.
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