Renowned professor Aswath Damodaran has predicted a 37% drop in Nvidia’s (NVDA) share price, citing the emergence of DeepSeek, a Chinese start-up claiming to have developed game-changing AI applications at lower costs. However, the author disagrees with this bearish forecast, arguing that DeepSeek’s arrival actually supports Nvidia’s position as the leading chip manufacturer.
Damodaran’s theory suggests that if DeepSeek has built a platform on par with or superior to existing AI models, it would undermine Nvidia’s dominance in the market. But the author believes this is still a speculative notion, and recent stories about DeepSeek’s funding raise doubts about its claims. Moreover, major tech giants such as Microsoft and Amazon are already investing heavily in internal chipware, making their reliance on Nvidia less dependent.
The author also notes that while DeepSeek’s arrival may lead to concerns about Nvidia’s growth trajectory, the company is still likely to remain a central player in AI infrastructure investments. Recent comments from Meta CEO Mark Zuckerberg and Microsoft leadership suggest that investment in AI will continue, with Nvidia remaining at the forefront.
Despite shares selling off amidst robust capital expenditure budgets from major customers, the author believes this is an opportunity for investors to buy Nvidia stock. They expect the company’s leadership to highlight strong demand for its chips during the upcoming earnings call, which could signal a turnaround in the stock price. The author sees dips as incredible buying opportunities, predicting that shares will soar higher in the future.
In conclusion, while Damodaran’s forecast is based on a valid concern about the rise of DeepSeek, the author argues that this phenomenon actually supports Nvidia’s position in the market. As such, they recommend taking advantage of current market volatility to invest in Nvidia stock.
Source: https://www.fool.com/investing/2025/02/08/the-dean-of-valuation-says-nvidia-stock-could-plun