Nvidia (NVDA) has seen its stock price surge nearly 90% over the past year, driven by tech companies’ spending on its artificial intelligence offerings. However, a Chinese start-up named DeepSeek’s announcement of a large language model for under $6 million raised concerns about Nvidia losing business.
The US Commerce Department is investigating whether DeepSeek used restricted advanced AI chips. Additionally, OpenAI accused DeepSeek of stealing its data to develop the software. These factors suggest that DeepSeek’s arrival may not significantly impact Nvidia’s business.
Moreover, the US-China digital supremacy battle could lead to export restrictions on AI chips, making it challenging for other Chinese companies to replicate DeepSeek’s technology at a low cost. As a result, DeepSeek might be banned in the US and other countries, limiting its competition with Nvidia.
Nvidia has several strengths that make it an excellent long-term investment. The company is one of the leading providers of AI chips, with a strong reputation for delivering record revenue and impressive financials. Its latest computing architecture, Blackwell, is selling well, and the chipmaker’s diverse range of applications for its chips puts it in a position to prosper.
Nvidia’s stock valuation is also attractive, with a price-to-earnings ratio on the low end of its past year’s range at press time. This indicates that investors are reasonably priced shares compared to the past.
Considering these factors, now may be a good time to buy Nvidia stocks ahead of its fiscal Q4 earnings report on February 26.
Source: https://www.fool.com/investing/2025/02/04/is-nvidia-stock-a-buy