Buy Nvidia for a trade into earnings later this month: Evercore ISI
Nvidia is set to report earnings in just more than two weeks, and one firm is getting bullish despite the stock’s recent losses in the wake of developments from Chinese artificial intelligence startup DeepSeek. On Monday, Evercore ISI added the chip giant to its tactical outperform list in the lead-up to the company’s results due out after the bell on Feb. 26. The firm has a $190 price target on the name, which implies more than 46% upside from Friday’s close. The stock has taken a hit in the wake of DeepSeek’s low-cost open-source model stoking fears around spending and competition in the AI space, which led at one point to a loss in market cap of nearly $600 billion — the biggest one-day loss for any U.S. company in history. Over the past month, it has underperformed the S & P 500 with a decline of more than 1%. NVDA 1M mountain NVDA, 1-month While Evercore ISI said investors are concerned that DeepSeek’s developments would lower AI demand, the firm does not think that is the case. “Consensus amongst the AI community is that DeepSeek cost improvements are evolutionary rather than revolutionary, and that lower cost/compute cycle or cost/token likely translates to increased demand for those tokens, which likely manifests in more accurate larger parameter models and/or an acceleration in the development of ‘multi-mode’ models that train on images and videos,” the firm’s analysts wrote in a note to clients on Sunday. Investors have also raised concerns that the move from DeepSeek shifts AI compute cycles away from Nvidia’s graphics processing units, or GPUs, and instead toward custom chips known as ASICs, or application-specific integrated circuits. Although Evercore ISI said ASICs will be impactful for high-volume internal workloads, the firm expects that external workloads, such as Amazon Web Services’ cloud infrastructure, will “remain dominated” by Nvidia. “NVDA remains the platform of choice for hyperscalers’ customers, the robustness of its software ecosystem and breadth of its development community put it 5-10 years ahead of anything else in the market,” the analysts added. Moreover, Evercore ISI noted that there is worry among investors about possible shipment delays for Nvidia’s Blackwell chips. And although that could lead some hyperscalers to “likely push some purchases from NVDA,” the firm revealed that demand for the company’s GPUs is “still outstripping supply.” Evercore ISI’s bullish stance on the stock joins the majority of analysts on Wall Street with a similar view. According to LSEG data, 57 out of 63 analysts have a strong buy or buy rating, while only six have a neutral stance. Nvidia also has a consensus target of around $172, reflecting more than 32% upside potential. Nvidia shares rose more than 3% on the heels of the tactical call.
