At least some investors are betting that Nvidia will "fall back" to the ground as it is on the verge of hitting the "world stock king".
According to a report released by S3 Partners on Thursday, the size of open short bets on Nvidia has reached approximately $34 billion, almost equivalent to the sum of Apple and Tesla, which are ranked second in short positions.
According to S3 data, the current open short bet on Apple is about $19 billion, and the bet on Tesla is about $18 billion.
After several consecutive days of sharp gains, Nvidia's stock price closed down about 1.18% on Thursday, and plummeted nearly 6% from a record high during trading, giving back the second highest market value of global listed companies to Apple. However, despite this, Nvidia has risen more than 10% so far this week, and the "unlimited" demand for its high-end AI chips has caused Nvidia's stock price to soar 144% in 2024.
It is worth mentioning that even though the size of short positions may seem astonishing, according to LSEG data, the short bet on Nvidia is currently only equivalent to about 1% of its stock market value.
Stuart Kaiser, head of US stock trading strategy at Citigroup, said, "Nvidia's advantage is that it is one of the very few companies that can truly generate AI revenue. The higher the stock price, the greater the potential for revenue, and of course, the higher the risk. But so far, everything seems good."
According to industry insiders, from the perspective of forward P/E ratio and compound annual growth rate of revenue over the next three years, Nvidia's stock price is not yet overvalued among US technology stocks.
Mizuho Securities recently predicts that Nvidia currently controls 70% to 95% of the AI chip market used for training and deploying models such as OpenAI GPT. Nvidia's pricing power lies in its 78% gross profit margin, which is a very high number for a hardware company that must manufacture and deliver physical products.
New York University finance professor Aswath Damodaran said, "If you're going to design a perfect and dynamic company from scratch, Nvidia is such a company. This is a great story, a CEO who adheres to his ideals, and the overall market situation makes him feel at ease. I think what you're seeing is one of the greatest growth trends in history, right in front of you."