The recent slump of Nvidia’s (NVDA) stock has led to a shift in investor sentiment as fears of a slowdown in AI spending linger. Typically, investors would rush to buy the chipmaker’s shares on dips, but this time, the mood seems a little different after shares plummeted 17% in a single day due to Chinese AI startup DeepSeek’s low-cost AI model. Nvidia’s shares have regained some ground but remain well below their January high. It is also worth noting that dip buyers only stepped in after Nvidia’s shares had fallen more than 21% from their peak, which indicates an increase in investor caution about AI spending.
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Indeed, investors like Gene Munster, who is a managing partner and co-founder of Deepwater Asset Management, stated that DeepSeek’s claims of high performance at a lower cost were a “wake-up call” for investors, according to Bloomberg. Munster noted that the psychology surrounding Nvidia’s stock has shifted dramatically from being “essentially an impenetrable, bulletproof story” to one that can “viciously change.”
Separately, Morgan Stanley, led by five-star analyst Joseph Moore, is also concerned about Nvidia and wrote that “the negative stock reaction has become the story, and in many ways frames the biggest risk from here.” The firm noted that investor sentiment has soured and questioned whether revenue acceleration can mitigate these concerns. In addition, Ivana Delevska, chief investment officer at SPEAR Invest, pointed out how manufacturing challenges and supply constraints have slowed down the rollout of the firm’s Blackwell chips. As a result, she believes that further delays will keep the stock range-bound.
Is NVDA a Good Stock to Buy?
Overall, analysts remain bullish on NVDA stock, with a Strong Buy consensus rating based on 37 Buys and three Holds assigned in the past three months. After an 82% rally in its share price over the past year, the average NVDA price target of $178.86 per share implies an upside potential of 36.6% from current levels.
