Nvidia stock drops 17% due to AI model concerns, but potential for recovery to $200.

From Nasdaq: 2025-02-02 12:00:00

Nvidia (NASDAQ: NVDA) stock plummeted 17% after DeepSeek’s budget-friendly AI model raised doubts about the company’s future chip demand. Despite concerns, Nvidia’s strong financial performance in recent years suggests a potential for recovery and reaching the $200 mark.

Major tech firms like Microsoft and Meta Platforms are increasing AI infrastructure spending, hinting at a resurgence in demand. The announcement of a $100 billion investment in AI infrastructure by key players highlights the industry’s growth potential, potentially benefiting Nvidia’s revenue and earnings growth in the future.

Despite DeepSeek’s cost-effective AI model, Nvidia’s dominance in the data center GPU market positions it well to capture the incremental spending on AI chips. With competitors like AMD and Intel struggling to compete in this space, Nvidia’s partnership with TSMC to double chip packaging capacity bodes well for meeting the tech giants’ demand, potentially leading to higher earnings growth in fiscal 2026.

To reach $200, Nvidia stock needs to rise 55% with projected earnings growth in fiscal 2026. Incremental AI infrastructure spending and improvements by TSMC could drive better-than-expected earnings growth, supporting a potential stock price increase. Even at a discounted forward earnings multiple, Nvidia remains an attractive investment option for potential gains.



Read more at Nasdaq: Can Nvidia Stock Still Hit $200 in 2025?