Edmond de Rothschild, an asset management institution owned by the Rothschild family, has been overweighting Nvidia for a long time. The company’s CIO said that it now holds much less positions. Given that AI’s valuation is too high, it is increasingly uncertain whether it will increase its position in AI technology stocks. If the valuation Continue to grow, will be more cautious. According to recent surveys, most analysts expect Nvidia to have room to rise, with an average target price 9% higher than Thursday’s close.
A long-term investor in Nvidia is paring down its positions amid the artificial intelligence (AI) boom, taking the opportunity to cash in on a skyrocketing stock price.
And the background of this organization is really not small. Edmond de Rothschild Asset Management, an asset management agency headquartered in Geneva, Switzerland, currently manages assets of 79 billion Swiss francs, or about 87.1 billion U.S. dollars.It is owned by the Rothschild family, an old European financial family with a history of more than 200 years.
Edmond de Rothschild has held positions overweight Nvidia since at least the end of 2020, and has recently taken some profits when Nvidia, which benefits from the concept of AI, has surged.
The company’s global chief investment officer (CIO) Benjamin Melman recently revealed that his current position in Nvidia is “much smaller” than in the past. Melman said:
“Will we add to AI tech? Given AI’s high valuations, we’re becoming less and less sure…if (valuations) continue to grow, we’ll even become more cautious.”
A spokesman for Nvidia declined to comment on the Edmond de Rothschild reduction. At present, most Wall Street analysts also believe that Nvidia has room to rise further.
Of the 49 analysts surveyed by FactSet, 41 have buy ratings on Nvidia, up about a third from the 30 who rated Nvidia in October last year. The analysts’ average 12-month price target on Nvidia is just under $432, implying a roughly 9 percent gain in shares from Thursday’s close.
Before Edmond de Rothschild revealed the reduction of positions, on Tuesday, Nvidia’s stock price had just hit a record high for the third consecutive day.
In early trading on Tuesday, Nvidia’s market value once exceeded $1 trillion as its stock price rose by more than 7%, and its market value approached the trillion-dollar mark at the close. Although the stock price fell back on Wednesday, closing down nearly 6%, rose more than 5% on Thursday and then fell back slightly on Friday, Nvidia is still the most promising to become the world‘s first trillion-dollar chip company. Its market capitalization has risen by more than $650 billion from a two-year low hit last October.
As the leader of AI underlying computing power, Nvidia is undoubtedly a big winner in the recent AI concept investment frenzy. As of this Wednesday, the stock price has risen by more than 36% in May, and the stock price has risen by 1.6 times since the beginning of this year.
Driven by the AI boom and market expectations that the Federal Reserve will pause interest rate hikes, the Nasdaq 100 index rose 7.6% in May this year, hitting a new high for the same period since 2005. The media pointed out that the premium of technology stocks to other industry sectors of the S & P 500 index reached an all-time high.
In fact, Wall Street has recently admitted that AI valuations are too high. Two weeks ago, Wall Street News mentioned that Michael Hartnett, the most accurate analyst on Wall Street since last year, and Bank of America strategist, said in a report that technology stocks and AI concept stocks are overvalued, suggesting that investors can sell U.S. stocks.
Hartnett said that the concept of AI is currently in an “infant bubble”, and the Fed’s interest rate hike cycle may not be over yet. Bubbles in the past have typically started with “easy money” and ended with rate hikes. Using history as a guide, he sees the need to start selling when the S&P 500 is at 4,200.
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