Despite the sell-off in Nvidia Corp. (NASDAQ: NVDA) stock, Jim Cramer continues to like the company. He recently supported two analysts who still think the shares are cheap. He posted his comments in the newsletter for his CNBC Investing Club.
24/7 Wall St. Key Points:
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CNBC’s Jim Cramer continues to like Nvidia Corp. (NASDAQ: NVDA) stock despite its sell-off.
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Two other analysts also think the shares are cheap.
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Cramer is moving against the wind. Nvidia’s shares are down 15% in the past three days. News from China showed that a new artificial intelligence product called DeepSeek appears to have been created for a fraction of what it cost to build OpenAI’s comparable product. People flocked to the Chinese product, and it was the most downloaded app at the Apple App Store for days.
The creators of DeepSeek said it cost them just over $6 million to build its model using Nvidia’s inexpensive H800 chips. Using Nvidia’s most advanced chips, it would cost OpenAI about $250 million.
The news from China triggered two sets of sell-offs. The first was a huge dumping of Nvidia shares. If DeepSeek only requires cheap chips, what would happen to the market for Nvidia’s expensive, more advanced, and more powerful chips? The bear case is that the demand for the company’s top-of-the-line products would shrink considerably. Some forecasts for its double-digit percentage revenue growth started to disappear.
Two analysts argued demand for high-end Nvidia chips could actually grow. Citi kept a Buy rating on the stock. It argued that DeepSeek did indeed use Nvidia’s more powerful chips. If so, the market for them would not erode. Cantor Fitzgerald remained “very bullish” because DeepSeek would make AI applications more “ubiquitous,” using Cramer’s language.
Although Cramer admitted DeepSeek could disrupt the market for expensive Nvidia chips, his takeaway was “I found it rather lacking in intelligence when I tried it, but it is a force in the marketplace.”
The second effect of the DeepSeek product was that it showed that companies like Microsoft and Meta might be paying for Nvidia chips they do not need. The stocks of both companies sold off. However, if Cramer and the analysts he mentioned are right, those sell-offs may be too great as well.
Prediction: Meta Platforms Will Be Worth More Than Nvidia in 2028
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