Should you buy Nvidia shares? Why price could rise this month

Seismic gains in Nvidia’s share price over the past two years have propelled it from mid-cap mundanity to one of the most valuable companies in the world, becoming a stock market sensation along the way.

The stock is up around 513% in the two years to 12 February, but the share price has fallen recently. Is now a good time to buy Nvidia’s shares, especially with a crucial earnings release approaching?

Nvidia (NASDAQ:NVDA) was the top stock bought on Interactive Investor’s platform in January, despite falling around 13% during the month as artificial intelligence (AI) start-up DeepSeek’s sudden appearance threatened to shake up the dominant position that Nvidia and the other Magnificent Seven stocks had established for themselves.

“Once the world’s most valuable company with a $3.5 trillion market cap, Nvidia recently lost nearly $600 billion in market value and fell to third place following the emergence of China’s DeepSeek,” said Sam North, market analyst at eToro.

That slump in the value of Nvidia’s shares was the largest single-day loss for any company in stock market history.

Nvidia wasn’t the only company impacted – DeepSeek’s shadow has been an ever-present throughout the big tech earnings season this year – but Nvidia’s shares clearly bore the brunt of the impact, having fallen 2.4% through 2025 so far.

Nvidia reports earnings on 26 February, and investors the world over will be keeping an especially keen eye on its performance and, more importantly, its forward guidance. Is the DeepSeek fallout overblown – and if it is, could its recent struggles present an opportunity to buy Nvidia’s shares?

Why did Nvidia’s share price fall?

Nvidia’s share price slump had one clear catalyst: DeepSeek.

This AI start-up from China became the highest-rated free application on the US App Store in January, sending shockwaves through the stock market given its significantly lower reported training costs, compared to US alternatives like ChatGPT.

Nvidia’s shares were particularly heavily impacted because its high-performance graphics processing units (GPUs), which had been viewed as critical for the development of high-performance AI models, weren’t used to build DeepSeek.

Instead, the app was built using less advanced Nvidia H800 chips – which were specifically developed to circumvent US export controls on the highest-performing chips.

This presented a problem for Nvidia, because its enormous valuation has been built on the expectation of exponential future growth. This expectation was founded on the assumption that only its chips could power the most advanced AI models, creating almost unlimited demand and giving Nvidia near-total pricing control.

As eToro’s North puts it, DeepSeek’s success “highlights that expensive cutting-edge chips may not be essential for AI breakthroughs”.

On that basis, you can’t blame shareholders for thinking it wasn’t worth the 50-times trailing earnings that it had been trading at. Cue the big selloff.

Was it a little overblown, though? It’s tempting to buy into the narrative that says the investment thesis for Nvidia’s shares has been blown apart by DeepSeek.

“The emergence of DeepSeek prompted a 17% one-day drop in Nvidia stock on the mistaken belief that the latest chips were no longer needed for AI,” writes Adrian Cox, research analyst at Deutsche Bank, in a thematic research note seen by MoneyWeek.

Cox was writing about a specific release that approximately coincided with DeepSeek: that of deep research, which OpenAI, the developer of ChatGPT, launched on 2 February.

“Deep research shows that you can never have too much computing power,” Cox writes. He highlights a bifurcation of AI tools into small models like DeepSeek, which can run well on a phone, and the other end of the spectrum: high-powered, cloud-hosted deep research models, like OpenAI’s, “where there is no let-up in the arms race for more and more compute”. Nothing about DeepSeek’s appearance to date suggests that this market will be disrupted.

Even at the less technical end of this spectrum, there is still good news for Nvidia.

“There’s an argument that even if the cost of compute comes down rapidly, it just means more companies will have access and the ability to create AI products and the overall aggregate demand for Nvidia’s product can actually still grow in that environment,” Matt Britzman, senior equity analyst, Hargreaves Lansdown, tells MoneyWeek. In economics, this is known as the Jevons paradox.

What are the expectations for Nvidia’s earnings?

Britzman also highlights the fact that Nvidia’s main customers – hyperscalers like Meta, Microsoft and Alphabet – have all increased their capital expenditure forecasts this year.

That bodes well for Nvidia. However, the big tech earnings season has so far seen markets punish semiconductor companies like Arm and Qualcomm that haven’t raised their forecasts correspondingly.

As such, as well as meeting (or exceeding) analysts’ headline expectations, we’ll likely need to see strong guidance figures in order to avoid Nvidia’s share price slumping when it releases earnings in two weeks’ time.

Analysts polled by London Stock Exchange Group expect earnings per share to come in at $0.84 for the quarter and $2.95 for the full year, on quarterly and annual revenue of $38.05 billion and $129.32 billion, respectively.

Meeting these numbers alone may not be sufficient to get Nvidia’s shares moving upwards again, though. Last time Nvidia reported earnings, despite beating expectations, the stock fell 2.5% in after-hours trading.

Additionally, North suggests that product and business innovation will be key lookouts.

“To maintain its leadership, Nvidia may need to showcase new innovations in hardware, like the upcoming Blackwell series, demonstrate the value of its high-performance GPUs in inference tasks where efficiency and speed are critical, emphasise strategic partnerships and potentially adjust its business model to address cost concerns,” he says.

Are Nvidia’s shares good value?

The hefty valuation of Nvidia’s shares has given plenty of investors pause for thought over the last two years, but it has, in fairness, come down substantially from the 100-times trailing earnings that the stock has reached during its run.

Following its recent quiet patch, Nvidia stock now trades at 52.4 times trailing earnings and 33.8 times projected earnings, according to data from stockanalysis.com (as of US market open on 13 February).