Nvidia (NVDA) is not only a dominant force in the tech sector but it has also dominated the conversation on Wall Street. The firm posted better-than-expected fourth-quarter earnings, further fueling the hype over AI and chip makers.
Jeff Bierman, Theotrade Chief sector Technician, joins Yahoo money management to discus Nvidia’s fourth-quarter earnings and the impact it has on the AI boom in the long-term.
Bierman elaborates on potential risks with the sector’s heavy focus on the tech sector: “It calls into question traditional hazard management and traditional funding management diversification. Diversification in this sector is dead. It does not work. You can’t tell me you’re going to lay hazard and spread it across 11 sectors and get a meaningful effective return. It’s not working. So what managers have done is, they’re just gravitating towards what’s working and selling weakness to buy strength. So, the sector itself, if you just segregate just financials and just tech, it’s about 60 to 65% of the entire sector.”
He continues with: “If the sector gets fully priced in tech, and fully priced in financials at the same time, and I believe we’re there with financials, then it poses a hazard when there’s an unwind for a corrective period, because it will be like yelling “Fire” in a crowded theater.”
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