Morgan Stanley Cuts Price Targets For Nvidia, Broadcom, Other Chipmaker Stocks Post DeepSeek Launch: But Retail Stays Positive

Morgan Stanley analysts were surprised by the response to DeepSeek's launch, a development that underscores the intense competition from China's crucial AI sector.

Despite dismissing the knee-jerk reaction of markets on Monday, where Nvidia Corp. (NVDA), Broadcom Inc. (AVGO), and other semiconductor and big technology stocks saw the erosion of nearly $1 trillion in market capitalization, analysts at Morgan Stanley noted that the impact of DeepSeek’s efficient performance could prove to be deflationary for the sector.

“We expected China to be competitive in AI, as they have been spending quite a bit of money developing AI, and export controls cannot prevent those investments,” the brokerage said in a recent note.

The brokerage maintained that it doesn’t foresee a change in spending behavior, noting that there are “obvious shortcuts” that companies can take in deploying their AI systems, despite DeepSeek delivering performance comparable to OpenAI’s ChatGPT with 97% less power consumption.

“China is going to be competitive in AI software and eventually hardware,” said the brokerage’s analysts.

Nvidia’s shares were up nearly 7% during mid-day trade on Tuesday. Broadcom’s shares were up 1%, Marvell stock gained over 2%, Astera Labs shares gained 4%, and Micron stock fell over 2%.

Retail sentiment on Stocktwits around Nvidia’s stock turned ‘neutral’ (47/100) from ‘extremely bullish’ a day ago.

On the other hand, sentiment around Broadcom was ‘extremely bullish’ (85/100), while it hovered in the ‘bullish’ (65/100) territory for Marvell Technology.

Meanwhile, one user expressed a positive outlook towards the Nvidia stock, citing the company's upcoming launch of new graphics cards this week.

Nvidia’s stock has more than doubled over the past year, gaining over 102% in this period.

Broadcom’s shares have gained over 67%, while Marvell Technology’s stock has surged over 46%.

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Also See: Baird Considers Nvidia, AMD As Less Expensive And Value Stocks Amid DeepSeek Selloff: Retail Stays Bullish