Nvidia’s wild stock swings put AI rally stamina in spotlight

Big swings in Nvidia Corp shares have reignited debate about the staying power of the chipmaker’s rally.

For bears, there’s still plenty of uncertainty about whether AI can live up to the hype and start delivering sufficient returns on investment. If not, demand is destined to cool and lead to a reckoning for Nvidia’s lofty valuation, which at 23 times projected sales is the most expensive in the S&P 500 Index.

Kirkbride is referring to the costly build-out of telecommunications networks in the 1990s in anticipation of a rapid internet traffic increase, which ultimately materialised at a much slower pace. Heavy spending and overly optimistic projections helped propel stocks like Cisco Systems Inc. to levels it still hasn’t surpassed more than two decades later.

Not only have those companies pledged to keep buying this year, many of them say they plan to spend even more. ADVERTISEMENT: CONTINUE READING BELOW For Steve Eisman, the Neuberger Berman senior portfolio manager who correctly bet against subprime mortgages before the 2008 financial crisis, that spending outlook gives Nvidia shares plenty of runway to keep rallying.

Source: Tech Daily Report (techdailyreport.net)

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