Nvidia stock news today: Nvidia (NASDAQ: NVDA) has been a focal point in the investment community, particularly regarding its potential to reach a $4 trillion valuation.
Are NVIDIA stocks worth investing? OpenAI officially launched ChatGPT on November 30, 2022, marking what many consider the beginning of the artificial intelligence (AI) revolution. During this transformative period, few companies have experienced a rise as dramatic as Nvidia (NASDAQ: NVDA).
From November 30, 2022, to January 24, 2025, Nvidia's shares skyrocketed by 743%, adding nearly $3 trillion to its market value. This incredible growth has captured the attention of investors, leading many to invest heavily in Nvidia stock.
In situations like this, investors often overlook potential risks, believing the stock will continue its upward trajectory without setbacks. However, seasoned investors know that the market can be unpredictable.
In late January, a Chinese startup named DeepSeek entered the AI landscape, claiming to have developed a platform comparable to ChatGPT at a fraction of the cost. This announcement sent shockwaves through the investment community, resulting in a sharp decline in Nvidia's stock price as panic selling ensued.
Before DeepSeek's arrival, Nvidia had a market capitalization of $3.5 trillion. As of February 4, this value has decreased by nearly $600 billion. This significant drop raises questions about the future trajectory of Nvidia's business, especially since the company has yet to report its fourth-quarter earnings, scheduled for February 26.
Competitors in the Race
The three most valuable companies in the world are Apple, Microsoft, and Nvidia. Of these, one company appears to have the best chance of reaching a $4 trillion valuation first.
Apple’s Prospects
Much of Apple's potential growth hinges on the successful launch of the iPhone 16 and the adoption of its new AI initiative, Apple Intelligence. However, there are doubts about whether this will be a game changer, which could affect investor enthusiasm.
Microsoft’s Challenges
While Microsoft presents a growth opportunity, the direction of its stock remains uncertain. The company’s success heavily relies on its cloud computing service, Azure, which faces stiff competition from Amazon Web Services (AWS) and Google Cloud Platform (GCP). Given the unpredictable nature of demand in the cloud sector, Microsoft's stock might be vulnerable to volatility.
Despite the unknowns surrounding DeepSeek and its technology, Nvidia may not be at significant risk. If businesses can develop AI more efficiently and cost-effectively, it could actually lead to increased spending on AI infrastructure. This phenomenon, known as Jevons Paradox, suggests that lower costs can drive higher overall demand.
Future Valuation Outlook
To reach a $4 trillion valuation, Nvidia's stock would need to rise 38% from its current levels as of February 4. If the upcoming earnings report is favorable, the stock could rebound significantly, requiring only a 14% increase to hit that target.
If Nvidia management can demonstrate sustained demand for its processors, the stock could regain momentum. I believe that, in the long run, DeepSeek may ultimately benefit Nvidia, and the stock could reach new heights.
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