The meteoric rise of Nvidia Corp. (NASDAQ:NVDA) in the stock market is drawing parallels with the historic surge of Tesla Inc. (NASDAQ:TSLA), sparking concerns about the sustainability of the AI frenzy.
What Happened: As Nvidia’s stock continues to soar, some investors are drawing parallels with Tesla’s rise to the top, as reported by Bloomberg on Sunday. In 2017, Tesla’s stock skyrocketed as investors anticipated the global domination of electric vehicles, propelling the company to the top of the U.S. auto industry.
However, Tesla’s shares have since plummeted by over 50% from their 2021 peak, and other EV stocks that surged alongside it have also seen significant declines. This serves as a cautionary tale for investors betting on Nvidia’s stock as a limitless AI future.
"If you really believe in this AI frenzy, you can visualize a future 10 years from now where AI is embedded in a lot of places, and you need these massive systems running chips that can only be delivered by Nvidia," said Sameer Bhasin, principal at Value Point Capital.
"But just because the general macro wave is real, it doesn't ...