Morgan Stanley Warning: Take a Look at NVIDIA, the Bull Market in US AI Stocks May Be Approaching Its Peak

This year, the good times for artificial intelligence (AI) concept stocks in the US stock market may be coming to an end.

A recent report from Morgan Stanley warns that the bubble of AI concept stocks is nearing its peak. The strategist points out that NVIDIA, the benchmark for AI, has risen over 200% since the beginning of this year.

Based on historical records, Morgan Stanley strategists predict that this round of stock market gains will come to an end. Previous records show that the median increase in the US stock market before the peak is usually around 154%.

As the undisputed leader in AI GPUs, NVIDIA has been hailed by Wall Street institutions as the "sole arms dealer" in the AI war. Its stock performance also reflects the enthusiasm for AI concepts. As of last Friday's close, NVIDIA's stock price has risen over 200% since the beginning of this year and its market value surpassed $1 trillion at the end of May, making it the first chip stock to break through this milestone globally.

Morgan Stanley points out that compared to the soaring NVIDIA, the broader AI index, such as the MSCI USA IMI Robotics & AI Select Net USD Index, has only risen by about 47% this year.

Since there is no unified characteristic for AI industry stocks as a whole, Morgan Stanley believes that only by looking at the index level can we effectively and fairly draw conclusions about the speed of the bubble's rise or fall, considering the uniqueness of individual stocks.

In fact, Wall Street has mentioned more than once that the rise of the US stock market this year is mainly driven by AI, and going long on blue-chip technology stocks is the most crowded trade. In May, when NVIDIA was highly sought after, Michael Hartnett, the most accurate analyst on Wall Street since last year and a strategist at Bank of America, issued a report warning that the valuations of technology stocks and AI concept stocks were too high and in the "infancy" stage of a bubble. At the same time, the Federal Reserve's interest rate hike cycle may not be over yet, and history tells us that it's time to sell.

Last month, some analysts from institutions engaged in a debate about whether the AI frenzy is repeating the dot-com bubble of the late 1990s.

Analysts who hold a positive view on this round of rebound believe that it is different from the bubble period. AI-related companies are at the forefront of technology that will change society in the next few years. Although the valuation of technology stocks is a key issue that needs attention, AI is driving the technology industry into a "1995 moment," and future growth will be unprecedented since the 1990s. And skeptical analysts believe that the current market frenzy is filled with speculation and false hope. They warn that the surge in technology stocks is just a bubble. The previous boom and bust cycles of technology stocks have shown that in the long run, it is much more difficult to identify a few companies that may eventually dominate a specific industry than imagined.