AI stocks like Nvidia are surging. Should you buy into the hype?
There could be money to be made in artificial intelligence, according to wealth managers who spoke to Global News, but they say there are some risks tied to the sector that might have you thinking twice about going all in on AI.as the California-based semiconductor company surpassed a valuation of US$1 trillion, joining an exclusive club with the likes of Apple and Microsoft who’ve crested that bar.
Other chipmakers such as Advanced Micro Devices have seen share prices surges this year for a similar reason to Nvidia’s rise, Small tells Global News. Other big names in tech such as Google parent Alphabet and Microsoft are also seeing boosts, he says, as they talk up their own AI plans and look to compete with OpenAI.
The high expectations placed on a company don’t mean there’s anything that’s fundamentally changed about their business or trajectory, Dedman notes, but they do set the stock up to reach new heights or, if they fail to meet the market’s new standards, a spectacular drop. Canada’s cannabis companies were heavily hyped-up ahead of the drug’s recreational legalization in 2016, Dedman says, as a brand new market was about to form.
Dedman says those concerns pose a serious risk to the growth of AI stocks. If those arguments are successful, it could mean states and regulators move quickly to crack down on AI and slow its ascent — putting a damper on companies that rode the promise of the technology to mind-boggling valuations.Small agrees that artificial intelligence is the “buzzword” on the market today, but he says that doesn’t automatically mean it’s a bubble.
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