This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
NVIDIA has a knack for jumping headfirst into the market's latest obsession or fad, be it the crypto mania of the past years or the current AI-focused interest. No one does this with more panache than NVIDIA, but that does not mean that it is the sole beneficiary of this approach. Just over the past few days, Palantir and CryptoGPT have emerged as major beneficiaries of the market's current penchant to indiscriminately reward anything that contains the word AI.
With Google searches for the word AI continuing to break new records day after day, the ensuing market bubble is now primed for a healthy dose of reality. But investors are in no mood for caution, as is almost always the case in irrationally exuberant periods.
$TSM fell 0.7% after the chip maker posted a 3.6% jump in Q1 revenue but said revenue in March fell 15% from a year earlier, the first (YoY) monthly decline in almost four years. https://t.co/35XOi0SCYT
— notreload (@thudderwicks) April 10, 2023
Yesterday, TSMC shocked the market when it reported the first monthly decline in revenue in around four years. If the world's biggest contract chipmaker is facing sizable headwinds, a rational market would have started discounting the aggravating demand weakness for NVIDIA's GPUs.
https://twitter.com/InvestRoiss/status/1645437213792927745
Caution, however, is not currently in vogue. Consider the fact that on a day that TSMC provided a solid inkling as to the persistent demand weakness that now threatens to envelop the entire semiconductor sector, NVIDIA shares ended the day up around 2 percent. What's more, a mere 1 percent gain in NVIDIA shares now equates to $6.71 billion, which is not that far from the company's peak annual earnings of around $10 billion!
For the benefit of those who might not be aware, NVIDIA's Hopper H100 and Ampere A100 GPUs are currently the product of choice when it comes to training AI networks. Moreover, the company plans to allow cloud-based access to its AI-training supercomputer via its AI-as-a-service business model.
Of course, it is not just NVIDIA that is benefitting from the current AI-related hype train. Palantir is best known for its Gotham platform, which is used by the CIA and other defense-related entities to gain analytical insights by leveraging the power of AI. The company's Foundry platform offers the same analytical capabilities in the commercial sphere. Recently, Palantir announced its brand-new Artificial Intelligence Platform (AIP), which leverages the power of natural language processing – akin to what OpenAI's ChatGPT does – to allow non-technical users the ability to quickly ask complex questions and receive pertinent insights in a seamless manner.
Market drunk. $PLTR said AI in a tweet Friday and it's not up 20% today.
— unusualwhales.com Snorlax (๑❛ ڡ ❛๑) (@snorlax_uw) April 10, 2023
As a result of the market's laser focus on anything related to AI at the moment, Palantir shares were up a decent 3 percent on Monday relative to Thursday's closing price.
Of course, NVIDIA's playbook is also being co-opted in the crypto sphere. While SingularityNET's AGIX coin is down 37 percent relative to its February peak, it is still up a whopping 791 percent so far this year. For the uninitiated, SingularityNet is a blockchain-powered ecosystem that enables the ability to easily "create, share, and monetize" AI services. Users can deploy the native AGIX coin to purchase a variety of AI services from listed vendors.
Moreover, CryptoGPT announced this week that it would raise $10 million in new funds at a $250 million valuation. The enterprise is a Layer-2 Ethereum scaling solution that uses Zero-Knowledge (ZK) Rollups to record, encrypt, and anonymize user data which is then used to train AI models.
".. the Commerce Department on Tuesday put out a formal public request for comment on what it called accountability measures, including whether potentially risky new #AI models should go through a certification process before they are released."@WSJ https://t.co/HnB7VeEXJE
— Carl Quintanilla (@carlquintanilla) April 11, 2023
Meanwhile, there are indications that the current AI-focused fad is due for a much-needed reality check. For instance, Chinese AI stocks plummeted yesterday when the administration pinned the "bubble" labeling on such equities following a scorching-hot 5x rally. In the US, the Commerce Department has called for additional screening of AI tools before their release. Should this step become a reality, it will dampen the current unbridled growth in the AI sphere.
The Q1 2023 rally in stocks has been extremely concentrated. Just five stocks, $AAPL $MSFT $NVDA $TSLA $META, have contributed to nearly 3/4 (73%) of the S&P-500 $SPY gains, while the top 10 have accounted for a whopping 95.4% - JEFFERIES pic.twitter.com/7avu0tdp8k
— Stock Talk (@stocktalkweekly) April 10, 2023
We noted in a previous post that Apple and NVIDIA have not seen a single insider buy transaction in around a year. This lack of validation on the part of the most well-informed cohort does not bode well for the prospects of these two stocks' ongoing rally.
Is a "reversal to mean" type of move now in store for NVIDIA? I guess time will tell. Until then, the AI mania continues.
Note:
The post has been edited to rectify the calculations of NVIDIA's market cap increases.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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