Did Nvidia just dispel the bear case for its stock? Why this analyst thinks so.

Nvidia is countering bearish concerns about a shift from AI training to inferencing, arguing that reasoning models like DeepSeek's R1 are driving increased GPU demand, particularly for its Blackwell architecture; Mizuho Securities and Bank of America analysts have expressed confidence in Nvidia, citing strong demand, successful Blackwell platform ramp-up, and a derisked China business, with Bank of America maintaining a buy rating and a $180 price target, suggesting significant upside potential.

Analysis

Nvidia is actively dispelling bearish concerns regarding the transition from AI training to inferencing, with company executives asserting that the emergence of reasoning models, exemplified by DeepSeek's R1, significantly expands the market opportunity for its GPUs. Ian Buck, Nvidia's VP of accelerated computing, highlighted that such models are driving increased demand for AI inferencing, creating a 20-fold larger total market opportunity, particularly benefiting the GB200 systems and the Blackwell architecture. Analyst sentiment strongly supports this view; Mizuho's Jordan Klein noted Buck's compelling argument that new training methods and models like R1 are a net positive for GPU demand. Bank of America's Vivek Arya reiterated a positive outlook, citing strong customer interest across cloud and enterprise, bolstered by the full-scale supply ramp. Key investor concerns are being addressed: the Blackwell AI platform is reportedly on track, constituting approximately 70% of compute sales in the fiscal first quarter, and the next-generation Blackwell Ultra chips are slated for production in Q2, with a smooth transition and limited ramp-up costs anticipated. Furthermore, Nvidia's China business is considered "fully derisked," with no current data-center revenue from Chinese customers in forecasts, making any future sales to this market incremental. Opportunities in sovereign AI are also emerging. Bank of America maintains a buy rating and a $180 price target, seeing nearly 27% upside, citing Nvidia's multiyear lead in performance, pipeline, incumbency, scale, and developer support as key strengths in the ongoing AI expansion.

Key Decisions for Investors

• Investors should consider Nvidia's robust positioning to capitalize on the expanding AI inferencing market, driven by reasoning models and supported by its Blackwell architecture, which addresses previous concerns about a demand slowdown.
• Monitor the execution of the Blackwell platform ramp-up, particularly the upcoming Blackwell Ultra chip production, as successful deployment could further validate the company's growth trajectory and technological leadership.
• Acknowledge that while Nvidia's direct China data-center revenue is currently minimal, any future product releases for this market or expansion in sovereign AI could represent incremental upside, supporting a continued positive outlook despite the stock's recent recovery.