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Summary
- Nvidia remains critical to AI despite DeepSeek’s cost-efficient R1 model. Current market fear represents a buying opportunity with 87.5% base-case upside in 12 months.
- Nvidia’s growth depends on stable U.S.-China relations. Diplomatic tension over Taiwan poses a greater long-term risk than competition from Chinese AI innovations.
- At a fair P/E multiple of 50-56, my Nvidia January 2026 price target is $222-$248.50, supported by a 75% EPS CAGR. The current price of $118.50 offers significant upside.
Since my last analysis of Nvidia Corporation (NASDAQ:NVDA) stock in December 2024, it has lost 13% in price. I issued a Buy rating at the time. As this analysis will show, I consider most of that price contraction to be based on irrational fear in the market related to the DeepSeek-R1 AI model. The larger threat appears to be the West’s medium- to long-term diplomatic relationship with China, which I have outlined in this article thoroughly. That said, this is an obvious buying opportunity to hold NVDA stock for the next 12 to 24 months, with a potential 87.5% upside in a base case by January 2026 from the present price of $118.50.
DeepSeek: Recapping The News
Nvidia shares suffered a historic drop of nearly $600 billion in market capitalization after Chinese AI company DeepSeek launched its cost-efficient AI model, R1.
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