Wall Street’s hottest artificial intelligence trading has officially become “boring.”
“Nvidia would be a very boring idea … because we all know the story,” serial entrepreneur Tom Sosnoff told Yahoo Finance’s Open Bid.
The former founder of Thinkorswim and Tastytrade believes that despite Nvidia’s technological dominance, the stock’s story is so well-known that it may be priced too perfectly.
Sosnov is no technology skeptic. In fact, he’s a fan of the product. He likened Nvidia’s (NVDA) AI platform to a “genius’ best friend,” with an IQ of 165 and always available.
The problem, he believes, is that Nvidia is now “fully priced.” When most analysts and retail traders are already on one side of the boat, this “boring” reality suggests there are few surprises that can drive prices significantly higher from here.
“I look at Nvidia and think, how many advantages are there? [is] ” Sosnoff said. ” This is not a function of Nvidia itself. It’s just a function of price. “
The warning comes as market volatility hovers at multi-year lows and stocks hit record highs. Nvidia shares are up about 40% over the past year, while the S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI) recently closed the month at record highs.
Sosnov is not predicting a total market collapse, but he is preparing for a reality check. He predicted there could be a “severe sell-off” of 10% to 15% between March and May.
“There is potential for the market to go down,” Sosnoff said. He noted that while the stock market was buzzing, the bond market was surprisingly stagnant. If this kind of volatility returns, “full-price” darlings like Nvidia are often the first to feel the gravity. Additionally, market changes could materialize when Fed Chairman Jerome Powell’s term ends in May.
Another provocative argument is that Nvidia’s dominance as the world’s most valuable company is under threat. When asked whether the AI giant could still retain its crown at the end of the year, Sosnoff expressed doubts.
“I don’t think it’s going to be Nvidia,” he said of the market cap race. Google (GOOG, GOOGL) recently surpassed Apple (AAPL) to become the second most valuable company in the world, and is not far behind Nvidia (NASDAQ: NVIDIA), which has a market capitalization of over $4 trillion.
