Nvidia shares (NASDAQ: NVDA) have lagged behind the S&P 500 by 9% over the past month as the market reacts to the emergence of Chinese AI startup DeepSeek. Analysts at Evercore ISI however, view this pullback as a prime buying opportunity ahead of Nvidia’s earnings report.

Reasons Behind Nvidia’s Stock Decline

Concerns about DeepSeek’s Technology: There are worries that DeepSeek’s custom AI chips may reduce demand for Nvidia GPUs.

Shift to ASICs: Speculation surfaces regarding AI companies potentially transitioning from Nvidia GPUs to ASICs.

Blackwell Release Delays: Uncertainties surrounding the launch timeline for Nvidia’s next-gen Blackwell architecture have also contributed.

Why Evercore Remains Optimistic About Nvidia

• DeepSeek’s advancements provide incremental savings rather than a groundbreaking transition.
• Reducing computing fees may ultimately enhance Nvidia’s GPU demand due to increased AI adoption.

• Nvidia’s strong software ecosystem keeps it ahead of competitors like AMD and AWS, which means AI firms rely on Nvidia’s robust tools.
• While ASICs offer robust computing power, Nvidia’s flexible GPUs are paramount for adaptable AI training.

The Road Ahead: Nvidia’s Earnings and Market Outlook

Nvidia’s quarterly earnings results are due on February 26. Analysts will be watching for revenue growth, AI chip demand, and updates regarding Blackwell’s release.

Will Nvidia’s earnings confirm its commanding presence in the market, or will competitive challenges weigh it down?