Nvidia’s $1T rally eclipses China’s DeepSeek, fueled by tech giants
▼ Summary
– Nvidia’s stock surged $1 trillion in two months as investor concerns faded and optimism grew, fueled by strong earnings addressing key issues like U.S.-China semiconductor restrictions and AI spending.
– Nvidia recovered from a $596 billion loss in January caused by China’s DeepSeek, which triggered a $969 billion drop in U.S. tech stocks, hitting Nvidia hardest.
– The stock rebounded over 45% since April’s low, reaching a $3.4 trillion market value, driven by AI demand and projected $330 billion in 2026 AI infrastructure spending by major clients like Microsoft and Meta.
– Nvidia trades at 29 times projected profits, below its historical average, with a low PEG ratio among the Magnificent Seven, despite risks like U.S. tariffs and reliance on China for 13% of Q1 revenue.
– Analysts are overwhelmingly bullish, with an average price target implying a 24% gain, yet Nvidia is owned by only 74% of long-only funds, suggesting potential for further investment.
Nvidia’s staggering $1 trillion rally has overshadowed China’s DeepSeek impact, as the chipmaker regains momentum amid renewed confidence in AI-driven growth. The company’s latest earnings report eased investor concerns about U.S. export restrictions, supply chain capabilities, and long-term demand for its Blackwell processors. This rebound marks a dramatic turnaround from January’s market turmoil, when China’s DeepSeek triggered a $969 billion wipeout across U.S. tech stocks, with Nvidia absorbing the heaviest blow at $596 billion in single-day losses.
Analysts note Nvidia has convincingly addressed earlier uncertainties that caused its stock to dip in early 2025. “The market’s key questions about sustainability and execution have gotten clear answers,” observed Thomas Martin of Globalt Investments. Since hitting an April low, shares have surged 45%, pushing Nvidia’s market capitalization to $3.4 trillion, narrowly trailing Microsoft.
The recovery stems partly from unwavering AI infrastructure investments by tech titans like Microsoft, Meta, Alphabet, and Amazon, which collectively contribute over 40% of Nvidia’s revenue. Industry projections suggest these firms will pour $330 billion into AI hardware by 2026, a 6% annual increase. “There’s zero evidence of cooling demand,” emphasized Samuel Rines of WisdomTree, who anticipates Nvidia’s valuation multiples could expand significantly.
Currently trading at 29 times forward earnings, below its 10-year average, Nvidia’s valuation appears conservative compared to peers. Its price-to-earnings-growth (PEG) ratio sits under 0.9, the most attractive among the Magnificent Seven stocks. While geopolitical risks persist, including reliance on China for 13% of Q1 revenue, new partnerships with Middle Eastern governments and a robust product roadmap are expected to offset potential headwinds.
Wall Street remains overwhelmingly bullish, with 77 of 78 analysts maintaining buy ratings and an average price target suggesting 24% upside. Surprisingly, only 74% of long-only funds hold Nvidia, a lower adoption rate than Amazon, Apple, or Microsoft, indicating potential for further institutional buying. “Many investors exited too early and are now scrambling to re-enter,” noted Angelo Zino of CFRA Research, highlighting the stock’s renewed appeal.
The dramatic reversal underscores Nvidia’s central role in powering the AI revolution, with its technology becoming indispensable across cloud computing, autonomous systems, and advanced data centers. As spending commitments solidify and supply chain concerns abate, the chipmaker appears poised to extend its leadership, leaving January’s DeepSeek-induced selloff as a distant memory.
(Source: Gadgets Now)
