Wall Street traders are too scared to fight the AI rally
economictimes.indiatimes.comWall Street when everyone else is a buyer, consider Rob Arnott, who made a sensible case five months ago that Nvidia Corp. had become a bubble.
“A textbook story of a Big Market Delusion” is how the venerable founder of Research Affiliates called it, citing extreme valuations after the shares quadrupled in just a year.
Since his September warning, however, the ‘bubble’ has gotten around $800 billion bigger — and the greatest risk right now is getting left behind in its wake.
“Never short-sell bubble stocks when they’re on a roll,” Arnott said this week. “But that doesn’t mean you have to own them.”
Wall Street isn’t deaf to the risks that gather when just a handful of high-valuation stocks dominate the market leader board, and Arnott’s view could ring true eventually. Yet after the world’s most valuable chipmaker smashed expectations with its blowout report Wednesday, the AI party is one nobody can afford to miss.
Short interest is nearly nonexistent among tech behemoths. Analyst price targets are surging. Positioning from hedge funds to retail traders is getting more aggressive.
“Right now, there’s no bear case,” said Alec Young, chief investment strategist at data platform Mapsignals. “You don’t get a move like this in a company this big if the bears have a leg to stand on.”
For active managers, the pressure is getting more intense by the day to ride the upward momentum across tech-powered indexes like the S&P 500 and Nasdaq 100, both of which just rose for the 15th time in 17 weeks. In turn, the Nasdaq
