Nvidia’s inventory is falling downwards as fear from a new Chinese startup called Deepseek Linger.
Openai launched ChatGpt commercially on November 30th, 2022. In my eyes, the date represents the dawn of the ongoing artificial intelligence (AI) revolution. For the majority of the last two years, no other company has witnessed a grand rise like Nvidia (NVDA) 2.87%)).
Between November 30, 2022 and January 24, 2025, Nvidia shares rose 743%. This meteoric rise has captivated the world of investment and has encouraged investors to (literally) cultivate Nvidia stocks at all costs.
As is common in these situations, investors start to consider only one side of the story. That is, the stock in question continues to rise because nothing may happen. But veteran investors are well aware, so the capital market always has something on the sleeve.
In late January, a Chinese startup called Deepseek appeared in the AI realm. This claims to have built a platform on par with ChatGpt, but at a small cost. Essentially overnight, the world of investment was shocked, and, of course, Nvidia stock tanked. Suddenly, the bull story surrounding Nvidia appears to have disappeared as investors continue to panic sales.
So far, we’ll go into detail about the amount of Nvidia that has been affected by Deepseek. Furthermore, I will argue why I think the sale is exaggerated and explain why I think Nvidia will be the first $4 trillion stock on Wall Street.
How has Deepseek influenced Nvidia?
Before Deepseek arrived, Nvidia had a market capitalization of $3.5 trillion. As of this writing (February 4th), Nvidia’s value had dropped almost $600 billion.
YCHARTS’ market capitalization data for NVDA
This is down considerably given that investors still don’t know how to change the trajectory of Nvidia’s business. The company has yet to report revenue for the fourth quarter of 2024 and says it is not planning to do so until February 26th.
Which companies stand out in the Nvidia way?
The three most valuable companies in the world measured by market capitalization are Apple, Microsoft, and Nvidia. For this article, one of these three companies has the most realistic chance of reaching a $4 trillion valuation before the cohort.
As explained in a previous article, much of the benefits of Apple’s stock relies on the successful launch and adoption rate of the company’s new AI, known as Apple Intelligence. This is my personal opinion, but I’m not entirely certain that Apple Intelligence will be a game changer, so I’m wondering whether investors will become a passionate buyer of Apple stock this year.
Microsoft is seen as more growth opportunities than Apple, but it questions what direction its inventory is heading. Many of Bull’s papers surrounding Microsoft are rooted in Azure, the company’s cloud computing infrastructure. Azure frequently competes with Amazon Web Services (AWS) and Google Cloud Platform (GCP).
Each of these cloud hyperschools invest billions in services that drive AI, but the fiercely competitive landscape cannot simply be dismissed. Azure is a solid business overall, but it can be very difficult to predict demand trends.
In my eyes, it is difficult to match investors’ expectations with unpredictable businesses. For this reason, Microsoft’s stocks are a bit vulnerable and I think we can experience a sharp turn in either direction, based on Azure’s performance and how investors feel about the company’s AI investments.
Image source: Getty Images.
Why do you think Nvidia will be the first $4 trillion?
There are still many unknown variables, as it relates to the exact dollar numbers and the training method DeepSeek used to build the model called R1. But even if a Chinese startup achieves a technological breakthrough that built a very capable AI at a low cost compared to other models, is Nvidia really at risk?
Ask the same question in a different way. If companies can train AI for more efficient and cheaper protocols, what direction do you think spending on AI infrastructure will take?
According to Jevons Paradox, spending actually increases. This concept explores the idea that the efficiency provided by technology can help reduce prices, but paradoxically, the more accessible products and services lead to more spending.
In other words, just because AI development can be costly over time does not mean that demand for NVIDIA services will decrease. In reality it’s the opposite. I’m following this idea, but I think the level of demand for Nvidia’s architecture could actually enter a new stage of growth precisely for Deepseek.
For Nvidia to reach a $4 trillion valuation, the stock will need to win 38% from its current level (as of February 4th). If investors are happy with NVIDIA’s earnings report later this month, they won’t be surprised to see the stock return before Deepseek Hoopla. Increases to achieve a 4 trillion dollar valuation.
If management can demonstrate that processor demand is robust, I think a new life in Nvidia stock is very achievable. In my eyes, I think Deepseek should be a net profit for Nvidia in the long run, and stocks could head towards new highs.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of Motley Fool’s board of directors. Adam Spatacco has positions at Amazon, Apple, Microsoft, and Nvidia. Motley Fool has posted and recommended positions on Amazon, Apple, Microsoft and Nvidia. Motley Fool recommends the following options: A $395 phone at Microsoft for January 2026 length and a $405 phone to Microsoft for January 2026 short term. Motley Fools have a disclosure policy.
