Here is an excerpt from the conversation:
Andrea Heng:
We have to talk about Nvidia. This is the AI darling, the crown jewel in tech today. And for awhile, all we ever heard was Nvidia this, Nvidia that, Nvidia the irreplaceable. So during the sell-off, $279 billion wiped out from its stock and … it was a record one day wipeout of any US company, of any US stock. Is this a sign that the AI bubble burst that everyone keeps speculating about is finally here?
Garett Lim:
I don’t think so. To say that Nvidia is the barometer of AI is definitely a good and easy way to look at what’s happening in AI, but it’s not the only player in AI. And what’s really been happening is that … most people are very overweight in Nvidia now. Not just institutions, but I will say retail as well. And … I think the leverage bets on Nvidia were also extremely high. So when you have a shock like that, you are probably going to see people who have borrowed even more money to invest in Nvidia need to get out (as soon as possible). So there were probably a lot of margin calls at the time.
But also I keep wanting to really just remind your listeners that you have to put it into perspective. Nvidia has had an amazing run – not just this year, but even the year before. So to really just say, “Hey, is this the end of (an) AI rally because we’ve seen a 10 per cent or 15 per cent or 20 per cent fall in the stock price as of last week,” I think you probably would have to say, “Look, we’ve had a phenomenal run.”
Source: CNA
