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Nvidia: Buying The Dip Could Be Very Painful

February 5, 2025
JHVEPhoto
Summary
  • Nvidia Corporation and the entire AI industry has been shaken by recent announcements from DeepSeek followed by Alibaba’s Qwen 2.5-Max and ByteDance’s Doubao-1.5-pro.
  • It will be important to see if the computing growth can make up for the massive decline in cost of AI inference and other tasks.
  • Currently, the bullish conviction in Nvidia stock is modest, which can be seen by the sideways stock movement following the last two quarterly beats and the big correction after the DeepSeek announcement.
  • Nvidia is still a great company with a great management, but it is highly likely that the company will face margin and revenue pressure in the near term.
  • The forward revenue and EPS projections have wide divergence between low and high estimates, which shows the massive uncertainty over its performance in the next few quarters.

Nvidia Corporation (NASDAQ:NVDA) stock and the entire AI industry have been shaken to the core in the last few days. There have been several announcements that have led to big questions over the earlier cost and compute projections. I have worked in the technology sector for over 4 years. This included working with industry stalwarts like IBM. I have done my MBA in finance and have been covering various blue chip stocks for the past 6 years. Having hands-on knowledge in the technology sector has helped me gain valuable insights into the ups and downs of this sector and predict winners and losers more accurately.

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