Nvidia faces market test post DeepSeek chaos
Nvidia is set to release its highly anticipated fourth-quarter earnings today at market close in the US, its first financial update since the emergence of China’s DeepSeek model.
With expectations running high, investors will be scrutinising the results for any signs of slowing momentum or continued dominance in the AI boom.
DeepSeek’s recent boom sent shock waves through the artificial intelligence (AI) sector, notably causing Nvidia’s largest single-day market cap loss in history.
Ahead of its announcement, Nvidia’s stock has been under pressure.
The chip giant, now valued at $3.1 trillion (£2.44 trillion), has seen its share price decline by 19 per cent from its early January peak.
Concerns over DeepSeek’s open source AI model, which can operate on less advanced chips and therefore at a far cheaper price point, have raised questions about Nvidia’s demand.
Yet some analysts remain optimistic.
Vivek Arya of Bank of America said today’s earnings call “could mark the trough in investor sentiment”, maintaining a bullish target price of $190 (£149.67), nearly 38 per cent above current levels.
Nvidia’s update could be pivotal not just for the company, but for overall market direction.
David Morrison, senior market analyst at Trade Union, said that this was especially true after recent speculation about Microsoft pulling back on data centre expansion, despite the company refuting this speculation.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, acknowledged investor nerves surrounding Deepseek, yet remained optimistic.
She said: “The arrival of low-cost Chinese model DeepSeek rattled investors but, given Nvidia’s first mover advantage and the huge infrastructure investment plans from tech giants like Meta, it’s an indication that Nvidia’s high-end chips will remain in demand.”
Meanwhile, Forrester senior analyst Alvin Nguyen highlighted how Deepseek’s emergence allows competitors like Intel to gain a foothold in the lower-end AI infrastructure market.
Yet, “this should not have an immediate impact on NVIDIA since demand for their GPUs exceeds their ability to supply”, he said.
Beyond numbers, investors will be closely watching chief executive Jensen Huang’s guidance on key areas that could shape the firm’s trajectory.
Future revenue projections will also be a major focus, as Nvidia has previously guided second quarter sales of $37.5bn (£29.54bn), a 70 per cent year over year increase.
Another pressing concern is the rumoured delay of the firm’s blackwell chip, which has reportedly been experiencing overheating issues.
Any confirmation of setbacks in production could weigh on sentiment.