Analysts update Nvidia stock price target amid DeepSeek hype

Stock Performance - Nvidia stock experienced its worst trading day in recent history, dropping from $142 62 on January 24 to as low as $125 96 in pre-market trading on January 27, marking a YTD loss of 6 20% [1] - The stock suffered an 11 68% loss due to a 'crisis of faith' in high AI capital expenditures, triggered by the rise of Chinese AI startup DeepSeek [2] DeepSeek's Impact - DeepSeek released its AI assistant app on January 10 and its latest LLMs, including DeepSeek-R1 and DeepSeek R1 Zero, on January 20 [2] - By January 27, DeepSeek became the top-rated free application in the US, surpassing OpenAI's ChatGPT, with models offering comparable performance at a fraction of the cost [3] - DeepSeek's models were trained using Nvidia's last-generation H800 GPUs, with a total development cost of only $5 57 million [3] Market Reaction - The semiconductor sector experienced a selloff, with Nvidia, a leading provider of AI chips, being one of the most affected companies [4] Analyst Perspectives - Citigroup analyst Atif Malik maintained a 'Buy' rating on Nvidia with a price target of $175, implying a 38 93% upside from current prices [6] - Malik expressed skepticism about DeepSeek's cost advantage, suggesting advanced GPUs were crucial for model development and fine-tuning [7] - Citigroup believes US-based AI companies have an inherent advantage due to access to cutting-edge chips [7] - Malik highlighted that recent capital expenditure announcements, such as Project Stargate, and the value of advanced GPUs for AI companies at scale will protect Nvidia from major disruptions [8] - Cantor Fitzgerald analyst C J Muse reiterated an 'Overweight' rating with a $200 price target, implying a 58 78% upside, viewing the development as bullish for Nvidia due to increased AI usage and compute demand [9]