Two Tech Titans Defy Market Trends
While the S&P 500 Index and major tech indices saw a decline for a second consecutive day, Nvidia Corp. NVDA and Super Micro Computer, Inc. SMCI showcased resilience, hinting at being potential safe havens in the market.
Could these tech giants be morphing into the market’s new safe havens?
The Bigger Picture: Safe haven assets maintain or increase in value during economic downturns due to their minimal correlation with the overall economy. Gold, bonds, and certain currencies like the U.S. dollar and the Japanese yen are traditional safe haven investments.
On a tumultuous day in the tech-laden Nasdaq, Nvidia stood firm amidst the chaos. The California-based company’s stock rose by 0.86% to $859.64, while Super Micro Computer climbed 1.53% to $1,090.82, building on its 18.7% surge from the previous day, buoyed by news of its S&P 500 inclusion.
AI Pioneers in a Sea of Uncertainty
Amidst the impending market rebound, both Nvidia and Super Micro are outperforming other large-cap tech stocks in premarket trading, positioning themselves as leaders in the AI domain.
Are Nvidia and Super Micro the Top Picks Among AI Stocks? Nvidia’s forward-thinking CEO, Jensen Huang, spotted the AI potential early on, providing the company an advantageous head start in the AI arena. The recent surge in demand for AI accelerators, especially for generative AI tasks, has significantly benefitted Nvidia, thanks to its wide array of AI-focused products.
Following consecutive quarters of stellar earnings reports, Rosenblatt Securities analyst Hans Mosesmann hailed Nvidia’s success, mentioning, “The shift towards accelerated compute alongside the rise of generative AI is heralding a new phase in the technology landscape.”
Insights into the AI Revolution
Super Micro Computer specializes in designing high-performance server and storage solutions tailored for complex computational tasks. A substantial portion of its revenue (71%) comes from the U.S., with additional contributions from Asia, Europe, and other regions.
The soaring valuations of these two stocks could potentially deter cautious investors. Industry experts suggest that the AI revolution is only in its nascent stages, with plenty of growth opportunities yet to unfold. Gene Munster of Deepwater Asset Management acknowledged the existence of an AI bubble, foreseeing its endurance for at least the next few years.
Echoing a similar sentiment, Wedbush analyst Daniel Ives projected a continued tech bull run, terming it a reminiscent moment of 1995. He indicated the imminent impact of the AI revolution and the projected $1 trillion surge in investment over the coming decade on the broader tech landscape.
In early trading, Nvidia surged by 1.61% to $873.51, while Super Micro Computer saw a 2.82% increase, reaching $1,121.54, according to analysis from Benzinga Pro.
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