Escaping the Traditional Haven
As the S&P 500 Index and major tech indicators faced a second consecutive decline, Nvidia Corp. NVDA and Super Micro Computer, Inc. SMCI flexed their muscles, showing resilience and strength in the face of market turmoil.
Could these AI-focused tech stocks possibly take on the mantle of safe havens in these uncertain times?
Shifting Tides: A New Haven Emerges Safe haven assets, long dominated by staples like bonds and gold, are now seeing a new challenger in the form of AI stocks. While gold is renowned for its stability and protection against inflation, and bonds for their steady returns, Nvidia and Super Micro have emerged as unconventional candidates for the title of safe havens.
On a tumultuous Tuesday, the Nasdaq Composite plummeted by 1.65%, with the Nasdaq 100 faring even worse at a 1.80% drop. Amidst this chaos, names like Apple, Tesla, Alphabet, Amazon, Meta, and Microsoft took a hit, yet Nvidia stood tall, defying the trend.
Based in Santa Clara, California, Nvidia ended Tuesday with a 0.86% rise, closing at $859.64. Meanwhile, Super Micro, a smaller player in the AI arena, surged by 1.53% to $1,090.82, building on its impressive 18.7% gain on Monday following news of its S&P 500 inclusion.
Source: Benzinga
Looking ahead, as the tech sector gears up for a potential rebound, both Nvidia and Super Micro are outshining their peers in premarket trading.
Insightful Investment: Is it worth betting on Nvidia and Super Micro in the AI landscape? Nvidia’s pioneering leader, Jensen Huang, recognized the AI potential early, giving the company a significant edge. With the launch of ChatGPT and the surging demand for AI accelerators, Nvidia’s suite of products has positioned it for exponential growth.
In light of Nvidia’s consistent earnings beats, Rosenblatt Securities analyst Hans Mosesmann noted the shift towards accelerated computing and the rise of generative AI as a transformative force in the industry.
While some major players are delving into in-house AI chip production, the long-term success of such endeavors remains uncertain.
On the other hand, Super Micro Computer specializes in high-performance server and storage solutions for complex computational tasks. With the majority of its revenue coming from the U.S., the company is also making waves globally.
However, the sky-high valuations of these AI stocks may deter cautious investors. Despite concerns about an impending AI bubble, analysts like Gene Munster from Deepwater Asset Management predict a sustained boom for the next few years, underscoring the ongoing evolution of AI.
In a recent statement, Wedbush analyst Daniel Ives expressed optimism about the continued tech rally, viewing the current landscape akin to the tech surge of 1995. With the AI revolution expected to catalyze extensive tech sector growth and substantial investment in software, the future looks promising for companies like Nvidia and Super Micro.
In early trading, Nvidia climbed by 1.61% to $873.51, while Super Micro Computer notched a 2.82% gain, reaching $1,121.54, as per Benzinga Pro data.
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