The “Dean of Evaluation” says Nvidia’s shares could plummet by 31%. Instead, there’s my paradoxical idea of ​​why Deepseek can make it the new best fuel.

Aswath Damodaran is an accomplished professor at the Stern School of Business at New York University. In particular, Damodaran specializes in evaluation. He has written several books on this topic, and in many cases he has his models and predictions made public. Over the years, Damodalan became known among financial journalists and media personalities as the “Dean of Evaluation.”

Last week, Damodaran announced a new forecast for Nvidia (NVDA) 0.90%)) – We are seeking a 37% drop in stock prices from our current level (as of February 5th).

Below we will explain in detail Damodalan’s logic and help explain why he is seeking such a decline. From there I give my views on why I don’t quite match his bearish predictions.

Deepseek changed the Chip story…or did it?

Now you’re probably familiar with the latest AI topic: the Chinese startup called Deepseek. Deepseek is the latest company to emerge in the AI ​​realm, claiming to have developed game-changing applications at just a small fraction of the costs used to build Openai or human mainstream models.

Damodaran’s analysis states that Deepseek “changed the AI ​​story.” “The AI ​​story has been changed. “A branched AI market has been created, commoditized, competitive and has a segment of premium products.”

On the surface, I understand what Damodalan is doing. if (keyword “if”) deepseek has built a platform that is comparable or superior to existing AI models, and has done so with low cost infrastructure.

For me, the above conflicts are still more of a theory than anything else. Every hour, more stories seem to be published about Deepseek. Many claim that the startups, which exceeded the first $6 million, are being funded. In that case, Nvidia doesn’t have to worry.

However, in a world built because Deepseek was far less than funded compared to what was cultivated by Openai and its cohort, we do not consider such a concept to be a bad thing for Nvidia. The reason for this is actually along with the fact that Damodalan chipware is commoditized.

It is well known that many of Nvidia’s biggest customers now include cloud hyperscalers such as Microsoft, Alphabet and Amazon. Additionally, major tech giants such as Metaplatform and Tesla are some of Nvidia’s biggest adopters. And many of these companies have invested heavily in internal chipware and are working with low-cost providers such as advanced microdevice.

The rationale behind these investments is not that Nvidia’s chips are not meeting expectations, but rather that they seek ways for these companies to diversify their own platforms and create opportunities for cost savings in the process. Because there is. As more chips enter the market, these products become somewhat commercialized anyway. In my opinion, Deepseek doesn’t change the narrative that chips become a commodity hardware product at all. It reinforces the idea.

Image source: Getty Images.

The exact numbers may be even more blurry, but the bigger picture tells the same story

One area I’m acknowledging is what appears to be a bit blurry now, is Nvidia’s growth trajectory. With the arrival of Deepseek, investors are taking into account the inconvenient (probably) notion that one day Nvidia’s growth could begin to slow down at a meaningful pace.

Such concerns are legal, but for now, Big Tech still appears to be the first to line up at Nvidia’s gateway. Recent comments from Meta CEO Mark Zuckerberg and comments from Microsoft’s leadership show that investment in AI infrastructure will continue for the near future.

While it is difficult to determine exactly how much of that spend will be designated by Nvidia, I am confident that major chipmakers will remain central to the world’s top AI businesses in the future.

Is it a good time to buy Nvidia stocks?

Ironically, Nvidia’s biggest clients have publicly stated that their capital expenditure (CAPEX) budget remains strong and their shares are still being sold.

NVDA data by YCHARTS.

Honestly, I wouldn’t be surprised if Nvidia shares continued to experience a decline until the company reported revenue on February 26th. Both the near and long term vision.

My paradoxical idea is that during Nvidia’s fourth quarter call, the company’s leadership will score one point above all. The demand for chips that include the latest and most expensive architectures is strong and should continue that way for a while.

So you won’t be surprised to see Nvidia’s stocks begin to turn around in an epic way. For now, I consider Nvidia stocks a dip to be an incredible buying opportunity, and the stock price will be much higher from where it is today.