The Fading Halo Effect: Nvidia’s Influence on Global Stocks
As the tech world continues to buzz with excitement, a lingering question remains: is Nvidia’s Midas touch losing its luster? The company’s ties to other firms have historically sparked significant jumps in shares, but recent trends suggest these gains may be short-lived.
A Brief Glimpse of Glory
Last Wednesday, Samsung Electronics Co.’s stock surged over 3% after Nvidia founder Jensen Huang expressed confidence in the Korean firm’s memory-chip capabilities. Similarly, MediaTek Inc. nearly touched a record high following an Nvidia tie-up announcement during the CES trade show. However, both stocks have since retreated around 6%, and Nvidia’s own stock has dropped 12% since Huang’s CES presentation.
Geopolitical Headwinds and Rising Competition
The sector is facing significant challenges, including geopolitical tensions and tech trade policy concerns. Growing competition for investor attention also poses a threat to Nvidia’s dominance. “I have doubts whether Jensen Huang’s comments could have as much power this year as last year,” said Jung In Yun, CEO at Fibonacci Asset Management Global Pte. “Nvidia’s position is still dominant, but rivals are also rising, and we should increasingly focus on what non-Nvidia players are saying.”
A Shift in Market Focus
Concerns over possible delays in Federal Reserve rate cuts and Biden administration curbs on AI chip exports have taken some of the wind out of tech stocks in recent weeks. The market is now focused on policy plans by Donald Trump and key adviser Elon Musk. “Nvidia’s power was much stronger last year as the AI chip was still a fresh idea and its stock skyrocketed,” said Ahn Hyunsang, CEO at Korea Investment Research Institute. “This year, Trump and Musk are expected to have a much bigger influence.”
Still a Force to Be Reckoned With
While Nvidia’s influence may be waning, it’s far too early to call time on its rally. The stock touched a new all-time high just last week, and it still has the power to move other companies’ shares. SKC Co., for example, is up more than 50% this year amid excitement over a meeting between its group chairman and Huang at CES.
The Hunt for New Winners
As the AI boom stretches into its third year, investors are hunting for new winners. Shares of Broadcom Inc. and Marvell Technology Inc. have sharply outperformed Nvidia’s last month on developments with their latest chips. This trend could lead to a wider array of drivers for the AI trade, less focused on Nvidia. “If you follow Jensen Huang’s words only, you may miss the broader trend,” said Fibonacci Asset’s Yun.
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