AI Boom Or YOLO Bust? Nvidia Options Frenzy Ahead Of GTC Raises Bubble Fears, Sparks 2021 Meme-Stock Déjà Vu
Portfolio Pulse from Shanthi Rexaline
Nvidia Corp. (NASDAQ:NVDA) shares have surged in 2023, driven by AI interest, particularly from ChatGPT. However, a Bloomberg report highlights a speculative frenzy in Nvidia options, with a significant number of call contracts purchased, raising concerns of a potential bubble. The report notes retail investors' activity reminiscent of the 2021 meme-stock craze. Despite this, Nvidia's role as an AI industry leader is acknowledged, but its stock dipped slightly after the GTC 2024 keynote, suggesting a 'sell the news' reaction.
March 19, 2024 | 9:27 am
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Nvidia's stock has seen speculative trading, particularly in options, amid its AI-driven surge. Despite being an AI leader, concerns of a bubble and a slight dip post-GTC 2024 keynote highlight market volatility.
The speculative trading in Nvidia's options, particularly the purchase of call contracts with strike prices nearly double the current stock price, indicates a high-risk investment strategy by retail investors. This, combined with the slight dip in Nvidia's stock price post-GTC 2024 keynote, suggests short-term market volatility and potential downward pressure on the stock price. However, Nvidia's strong position in the AI industry may mitigate long-term risks.
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IMPORTANCE 90
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