Nvidia Stock Takes a Hit, But Big Tech’s $325 Billion Investment Keeps Hope Alive

Nvidia’s stock has been struggling, down over $500 billion from its early January peak, with a significant dip in value this year. However, there’s still hope for the AI-chip giant, as its biggest customers—tech giants—are making big spending commitments that could boost Nvidia’s outlook.

Nvidia has long dominated the market for AI chips, with its Blackwell processors offering improved efficiency and performance. These chips have seen huge revenue growth since their adoption in early 2023. The company’s fiscal 2024 sales more than doubled to nearly $70 billion, and analysts expect $129 billion in sales for fiscal year 2025.

Despite this, expectations for a 50% growth rate in the coming year were challenged when DeepSeek, a China-based AI startup, claimed to have built a large language model system for a fraction of the cost of its U.S. competitors. This news led to a massive drop in Nvidia’s stock price, with nearly $600 billion wiped from its market value in one day.

However, there’s skepticism about DeepSeek’s claims. Reports suggest the company used Nvidia chips that were banned for export to China under U.S. regulations, easing concerns about the immediate impact on Nvidia’s business.

In good news for Nvidia, big tech companies like Microsoft, Meta, Google, and Amazon are increasing their capital spending, with a combined total of $325 billion planned for this year alone. This spending is set to continue in the coming years, and Nvidia remains a key supplier of AI chips for these companies.

While some of these tech companies are reducing reliance on a single supplier by developing in-house chips, Nvidia’s GPUs are still in high demand. Analysts believe the demand for Nvidia’s products will continue to grow, especially with the increasing need for AI compute power.

Nvidia is also preparing to report its fourth-quarter results on February 26. Investors will be watching closely to see how the company addresses the impact of DeepSeek, the rising competition from companies like Broadcom and AMD, and its share of the big tech investments.

Despite the challenges, many analysts remain optimistic about Nvidia’s future. The company’s ability to create new markets, rather than simply competing for market share, could help drive its continued success.