Photo by Antoni Shkraba
Investing in the stock market can often feel like a high-stakes game of chance, especially when confronted with the allure of rapidly rising stocks like Nvidia. However, experts warn that chasing after Nvidia’s soaring stock price could lead investors down a risky path, potentially ending in substantial losses.
While Nvidia’s stock may continue to soar in the short term, experts warn investors should exercise caution and avoid succumbing to the fear of missing out (FOMO). Instead of chasing after speculative stocks, have a focus on long-term fundamentals.
“We’ve been here before, many times. New technologies often produce bubbles — railways in the 19th century, automobiles and radios in the 1920s, the internet in the 1990s and now the AI boom, which was triggered by Open AI’s launch of ChatGPT late in 2022,” Unherd.com reported.
Nvidia, a leading semiconductor company known for its cutting-edge technologies in artificial intelligence and graphics processing, has seen its stock price skyrocket in recent months. With a staggering 224.64 percent increase in the past year alone, Nvidia has become one of the most talked-about stocks in the market, Business Insider reported.
Despite its impressive performance, some analysts caution against buying into the Nvidia frenzy, citing concerns about the stock’s inflated valuation and the broader market dynamics at play.
Sarah Kunst, an analyst at Cleo Capital, describes Nvidia’s current valuation as “frothy,” indicating that the stock price has reached unsustainable heights. With a price-to-earnings ratio of 97, significantly higher than its trillion-dollar peers, Nvidia’s valuation appears disconnected from its underlying fundamentals.
“I think the price that it’s at right now is very, very, very hard to maintain,” Cleo Capital’s Sarah Kunst said in a CNBC interview.
Furthermore, the current market environment, characterized by optimism and ample liquidity, has contributed to the exuberant rise in Nvidia’s stock price. As investors seek to deploy their cash reserves into the market, high-flying stocks like Nvidia become attractive targets for speculation.
Photo by Antoni Shkraba: https://www.pexels.com/photo/a-person-using-a-smartphone-5583964/
