TD Cowen says DeepSeek sell-off could be the Nvidia entry point traders have been waiting for
Investors who missed out on Nvidia’s massive run last year may have another opportunity to get in the trade, according to TD Cowen. “We understand the concerns, but this could be the entry point in AI stocks, NVIDIA in particular, many have been waiting for,” analyst Joshua Buchalter wrote in a note titled “Less Is More – ‘Deepseek Moment’ Not The Negative Market Is Assuming.” On Monday, AI chip darling Nvidia and shares of other technology firms in the U.S. plummeted amid a global sell-off spurred by concerns over ensuing competitiveness and the country’s position in the space following the rise of Chinese startup DeepSeek. Nvidia shares slid 13%, while Microsoft dipped about 3% NVDA 1D mountain NVDA, 1-day The startup released a reasoning model last week that reportedly outperformed the latest model by OpenAI in third-party tests . That comes after the company released a free, open-source large language model in late December, saying it was created in two months for less than $6 million. “Current AI investment is unprecedented, but we would note this is largely counter to the precedents set across the history of computing,” Buchalter also said. “Rather than lead to less consumption of accelerated hardware, we believe this Jevon’s Paradox dynamic should in fact lead to more consumption and proliferation of compute resources as more impactful use cases continue to be unlocked.” On that point, the analyst believes that DeepSeek’s innovation is unlikely to lead to a weaker demand environment in the near term. On the contrary, he said a “strong” competitor from China should “raise the stakes” of the spending environment — especially for hyperscalers. “We see little reason this specific model paradigm should be seen as a negative for hardware spending in either the near or long term,” Buchalter continued. “Let’s not forget that just last week entities that have been at the forefront of AI advancement announced Stargate and Meta once again raised CapEx to power their AI ambitions.” Despite Monday’s steep decline, Nvidia shares remain about 100% higher over the past 12 months. Last year, the chipmaker rallied 171%. That said, the stock on Monday traded about 19% below a record set earlier this month.
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