A Mizuho analyst is concerned about the strong momentum in chip stocks despite the lack of fresh catalysts. Nvidia Corp. shares have been climbing for six consecutive days, set to hit a sixth straight record high.
Jordan Klein, an analyst at Mizuho Securities, finds this rapid rise worrying, especially as other AI-focused companies like Broadcom Inc., Marvell Technology Inc., and Taiwan Semiconductor Manufacturing Co. have also surged without significant news.
Klein believes that while chip companies stand to benefit from AI hardware growth, the increasingly frenetic investor sentiment is cause for concern. He observes investors either chasing high-performing stocks or ditching previous winners to join the AI-chip trend.
Klein points out the self-reinforcing nature of this rally, where rising prices prompt investors to shift funds from underperforming stocks to those with strong momentum.
He draws parallels between this market behavior and the speculative frenzy of the late 1990s and early 2000s, warning that such exuberance often precedes market downturns. Klein sees Nvidia’s upcoming GTC event as a potential turning point. He anticipates some investors may take profits afterward, while others may panic if the event fails to meet expectations.
Klein is unsure which stock could replace Nvidia’s market leadership if its rally falters. He notes that other tech giants like Apple, Tesla, Alphabet, and Meta may lack the same market-moving power. Looking ahead, Klein expects Broadcom and Marvell’s quarterly results to further fuel excitement, especially if they provide bullish outlooks on their AI products.
Despite his positive view on the semiconductor sector, he remains cautious of potential profit-taking following Nvidia’s event and ahead of the next chip earnings season.
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