Nvidia is in a bubble and the AI theme is “overhyped” – Elliott Management

Hedge fund Elliott Management said that Nvidia (NASDAQ:NVDA) is in a bubble as the artificial intelligence theme pushing its share price is overhyped.

In a letter to its clients, Elliott Management said that the technology mega-caps, such as Nidia, are in a “bubble land” and that the hedge fund is skeptical that these companies will continue to purchase Nvidia’s (NVDA) graphic processing units in such huge volumes.

Elliot said that many AI applications are not ready for “prime time” and that many of the expected uses are “never going to be cost-efficient; are never going to actually work right” and that they “will take up too much energy or will prove to be untrustworthy.”

The chipmaker stocks have suffered some losses due to concerns about heavy — tens of billions of dollars — AI spending for infrastructure.

Nvidia Corp. (NVDA) is down 6.67% today so far, after a 120% year-to-date gain. The stock is also down 9.23% from a month ago. Nvidia briefly became the world’s largest company with a market cap of more than $3.3T.

Intel Corp. (INTC) fell 20% after the U.S. market close yesterday after it announced plans to cut about 15,000 jobs. It is currently down 5.5% from yesterday, also down 5.15% from a month ago, and down 42.19% year-to-date.

Broadcom Inc. (AVGO) is down 8.5% from yesterday, and down 8% since a month ago.

QUALCOMM Inc. (QCOM) is down 9.37% from yesterday, and down 17.28% from a month ago.

ASML Holding N.V. (ASML) is down 5.66% from yesterday, and down 14.65% from a month ago.

Advanced Micro Devices Inc. (AMD) is down 8.26% from yesterday, and down 14.69% from a month ago.

Elliott Management said that the hedge fund has stayed away from “bubble stocks,” mentioning the “Magnificent Seven” — (GOOGL), (AAPL), (AMZN), (META), (MSFT), (NVDA), and (TSLA).