Aswath Damodaran is a professor at the Stern School of Business School of New York. In particular, Damodaran specializes in evaluation – writing several books on the subject, and often publishing his models and prognosis of the public. Over the years, Damodaran has become known as the “Dean of Valuation” among financial journalists and media figures.
Last week Damodaran posted a new forecast Nvidia(NASDAQ: NVDA) – summoned to 37% of the drop in shares from current levels (from February 5).
Below, I will describe Damodaran’s logic in detail to help you explain why he calls for such a fall. From there, I will take over why I did not fully align with his bear forecast.
So far you are probably familiar with AI’s latest conversation-naime, Chinese start-up called Deepseek. Deepseek is the latest company that has appeared in the AI Empire, claiming that an app to change the game for a fraction of the costs used to build the main models from the Openi or Anthrop is developed.
In Damodar’s analysis, he says that Deepsek “changed AI story” that “will create a bifurcated AI market, with a segment of low quality AI products that are comfortable and very competitive and segment of the premium product.”
On the surface I understand what Damodarna gets. If (the keyword “if”) Deepseek built a platform compared to or superior existing AI models and did so with less expensive infrastructure, Nvidia will endanger the Nvidia position as the king of the Empire of the Chip.
For me, the upper claim is still more theories than anything. It seems to be published more every hour about the story of Deepsek-OD that many now claim that the start-up was funded with much more than the initial $ 6 million he claimed. If this is the case, then Nvidia is less concerned.
But in a world where Deepseek was built for far less than financing compared to what plowing in the opening and his cohort, I still do not see such a term as a bad thing for Nvidia. The reason is actually aligned with Damodaran’s chips that becomes comfortable.
Currently, many of the biggest customers of Nvidia are known to include Cloud Hyperscalers like Microsoft,, Alphabetand Amazon. Moreover, large technological giants like Meta platform and Tesla They are also some of the greatest adoptive parents NVIDIA. Which is also Many of these companies are known to invest in internal chips and work with lower costs, like Advanced micro devices.
The explanation of these investments is not that Nvidia’s chips are missing from expectations, but because these companies seek ways to diversify their own platforms and create cost opportunities in the process. As more chips enter the market, these products would become a bit comfortable anyway. In my mind, Deepseek does not even change the narrative of chips that become a commodity hardware product – it is the strengthening of the idea.
Picture source: Getty Images.
One area that I will admit right now looks a little blurry is Nvidia -in the growth path. I think Deepseek’s arrival causes investors to consider the unpleasant (but probable) idea that the growth of Nvidia could one day start comparing a meaningful pace.
Although such concerns are legitimate, Big Tech seems to be the first in line at the threshold of Nvidia. Recent comments from Marko Zuckerberg’s Meta CEO, as well as comments from Microsoft’s leadership, indicate that investments in AI Infrastructure will continue in the foreseeable future.
It is difficult to determine exactly how much of these consumption will be marked for Nvidia, but I am very convinced that the leading chip manufacturer will remain central in the world’s AI companies in the future.
What is ironic is that, although Nvidia’s largest buyers have publicly stated that their capital expenditures (Capex) remain robust, the shares are still sold out.
Honestly, I would not be surprised if Nvidia’s shares continue with the falls until the company reports to the earnings on February 26. I think that investors and analysts will have enough details that could signal what AI consumption will look like throughout and close and long -term horizons.
My contrasting understanding is that during the NVIDI’s call in the fourth quarter, the company leadership will lead one point above all: the demand for its chips-uttered by the latest and most expensive architecture-can be strong and should continue for some time.
As such, I would not be surprised if I could see Nvidia shares start to turn in an epic way. For now, he immerses in Nvidia Stock as incredible options for buying and I think the stock will increase much more than the place where it is today.
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