Nvidia’s stock price plummeted sharply after China’s DeepSeek claimed to have built an AI model for less than $6 million, potentially reducing demand for the company’s GPUs. However, two major customers of Nvidia, Meta Platforms and Microsoft, have announced plans to increase their investments in AI research, which may offset any losses.
Meta Platforms CEO Mark Zuckerberg stated that investing heavily in AI will be a strategic advantage over time, while Microsoft CEO Satya Nadella believes that as AI becomes more efficient, demand for AI chips will skyrocket. Analysts agree that the Jevons paradox, which states that cost reductions can lead to increased spending, applies to Nvidia’s situation.
As a result, Morgan Stanley analysts have revised their estimates to show an increase in AI infrastructure spending among the four biggest hyperscalers. The median target price of Nvidia shares remains high, indicating 45% upside potential from its current share price.
Source: https://www.nasdaq.com/articles/nvidia-stock-investors-just-got-good-news-meta-platforms-and-microsoft