Nvidia's Meteoric Rise Indicates AI Bubble's Imminent Peak, Top Wall Street Analyst Warns

A growing proportion of Wall Street analysts are adopting a more cautious posture towards the artificial intelligence (AI) rally.

Morgan Stanley strategist Edward Stanley says semiconductor giant Nvidia Corp.’s NVDA impressive surge of over 200% in 2023 is a potential indicator of the AI stock bubble apex. The rise is likely in its “later-innings,” he added. Based on past trends, bubbles generally rally a median of 154% in the three years before their peaks.

Bank of America strategist Michael Hartnett also noted the excessive rally of this market, Bloomberg’s Subrat Patnaik illustrates.

Chart: Nvidia Stock Price Has Tripled in 2023

AI Benchmarks Show Mixed Results

Nvidia has been a major actor in the AI hype, highlighting the industry’s rise. Wider AI exchange-traded funds, such as the Global X Robotics & Artificial Intelligence ETF BOTZ or the First Trust Nasdaq Artificial Intelligence and Robotics ETF ROBT, have showed more modest returns, rising 33% and 23%, respectively.

Broader AI Industry Could Be At Peak

Individual stocks within the sector possess unique characteristics, making it challenging to draw definitive conclusions about the speed of upswing and drawdown of bubbles at an individual level. However, Stanley suggests that analyzing bubbles’ trends may be more meaningful and fair when done at an index level.

Read Now: Musk’s X.ai Takes Over AI.com: A New Chapter In The Battle With OpenAI And The AI Industry

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Shutterstock