Last week, the Chinese startup Deepseek published a research document in which she claimed to have formed a wide language model competing with the performance of the main American models, while spending much less money than American companies. Actions of Nvidia (NVDA 0.77%)) Strongly making the news because of its dominant position in the accelerator chips of artificial intelligence (AI).
However, Wall Street has good news: several analysts think that the effective training techniques used by Deepseek can actually benefit from Nvidia by reducing costs and accelerating the adoption of AI. For example, software companies may be able to integrate AI features into applications without spending as much money to train models. But the execution of applications would always require powerful chips, which could create more request from Nvidia GPU.
Above all, several Wall Street analysts have updated or reiterated their forecasts since Deepseek published his research document last week, and they all see the rise in NVIDIA shares from its current price of $ 128 per share .
- Gil Luria in DA Davidson has set its target price at $ 135 per share, which implies an increase of 5%.
- Joseph Moore at Morgan Stanley Attach its target price to $ 152 per share, which implies an increase of 18%.
- Atif Malik at Citigroup Attach its target price to $ 175 per share, which implies an increase of 36%.
- Stacy Rasgon at Bernstein Attach its target price to $ 175 per share, which implies an increase of 36%.
- CJ Muse at Cantor Fitzgerald has set its price target at $ 200 per share, which implies an advantage of 56%.
In addition, Dan Ives at Wedbush Securities recently told CNBC the sale of NVIDIA which followed the announcement of Deepseek created a “gold purchase opportunity”. I fully agree with this evaluation, especially because President Trump wishes to reduce corporate taxes and stimulate investments in AI infrastructure.
President Trump wants to reduce the corporate tax rate
President Trump in his first mandate signed the tax reduction and jobs in 2017. Goldman Sachs. And companies have continued to buy stocks faster than in previous years.
Trump, during his last presidential campaign, proposed to further reduce the tax rate of companies for companies that manufacture goods at the national level, this time at a lower 90 years of 15%. In theory, this would stimulate the benefits of companies, which could lead to even more aggressive share buybacks. I think Nvidia would look at this opportunity.
The flea manufacturer spent nearly $ 13 billion in shareholdings in the third quarter of the calendar year 2024, according to data from S&P Global. Only two S&P 500 Companies have allocated more money to share the buyouts: Apple spent $ 25 billion and Alphabet spent $ 15 billion. Above all, the NVIDIA board of directors has already given authorization for $ 46 billion in additional redemptions.
Here is the overview: if the Trump administration reduces the tax rate of companies, allowing Nvidia to look at buyouts, its benefits per share, which should currently increase to 39% per year in the next two years, would probably increase more quickly than Wall Street does not plan. And the upward revisions of profits estimates tend to stimulate the assessment of the course of action.
President Trump speaking with journalists. Image source: Official photo of the White House by Shealah Craighead.
President Trump recently announced the Stargate project
President Trump announced last week the Stargate Project, which aims to maintain American leadership in artificial intelligence with up to $ 500 billion in private sector investments in American infrastructure over the next four years.
Stargate is a joint venture involving Openai and Flexible bank. The first assumes operational responsibility and the second assumes financial responsibility. They plan to build 20 American data centers, each of half a million square feet and optimized for AI. The first data center is already under construction in Texas and other potential sites are being evaluated.
NVIDIA graphic processing units (GPU) are the industry standard in accelerating AI tasks, so that the company is likely to provide all the necessary GPUs. Indeed, an Openai press release said: “As part of Stargate, OracleNVIDIA and OPENAI collaborate closely to build and use this computer system. “”
Details are still lacking, but Ben Reitzes at Melius Research estimates that Nvidia could receive more than $ 100 billion in Stargate spending. That theoretical income has not been taken into account in the estimates of Wall Street, which means that the Stargate project is another reason why Nvidia’s revenues could grow faster than expected in the coming years.
Citigroup is an advertising partner of Motley Fool Money. Suzanne Frey, director of Alphabet, is a member of the board of directors of Motley Fool’s. Trevor Jennewine has positions in Nvidia. The Motley Fool has positions and recommends Alphabet, Apple, Goldman Sachs Group, Nvidia, Oracle and S&P Global. The Motley Fool has a policy of disclosure.
