Nvidia investors are facing an unexpected challenge at the start of the year, with shares of the chipmaker down by 1% compared to the S&P 500 index. Despite this, analysts remain bullish on the company’s prospects. Analysts have pointed to three reasons for Nvidia’s weakness: DeepSeek lowering AI demand, shifting AI compute cycles away from GPUs and to ASICs, and Blackwell chip delays.
However, experts argue that Nvidia remains a leader in the AI market due to its robust software ecosystem and large development community. Mark Lipacis, an Evercore ISI analyst, believes the company will reassure investors on its Blackwell execution and signal confidence for future growth.
The competition is intensifying with companies like Amazon, Google, and Broadcom entering the AI chip space. Despite this, analysts like Vivek Arya from Bank of America remain optimistic about Nvidia’s prospects. He has a $190 price target, which assumes significant upside potential.
Investors may see an opportunity to buy Nvidia stock into earnings on February 26, despite concerns about sector growth and competition. Data from Yahoo Finance shows that there have been upward revisions to Nvidia’s estimates for 2025 earnings and EPS estimates for 2026, suggesting that the market is not yet pricing in sector worries.
Despite these challenges, experts believe that Nvidia’s strong pipeline of products and physical AI capabilities will create excitement ahead of its GTC conference on March 17. As a result, investors may see value in the stock as it looks to build on its current success.
Source: https://finance.yahoo.com/news/3-reasons-why-nvidia-is-underperforming-the-sp-500-going-into-its-earnings-122736677.html