Nvidia becomes Tesla’s successor as market flips from EV to AI

tech.hindustantimes.com:

Nvidia Corp.'s rise is captivating the stock market and driving the S&P 500 Index to new highs. But it also raises cautionary reminders of another investor darling that soared on dreams of a technological transformation, only to tumble back to earth when those hopes turned to disappointment. 

That stock belongs to Tesla Inc., which sparked its own mania in 2017 as investors bet that electric vehicles were going to take over the world. Back then, Elon Musk's company was a phenomenon as it blew past established carmakers like General Motors Co. and Ford Motor Co. in market capitalization to become America's biggest auto manufacturer. Some analysts were looking beyond the industry and calling it “the next Apple Inc.”

Now, Tesla shares are down more than 50% from their 2021 peak, and other EV stocks that raced higher with it are shadows of their former selves. All of which should be sobering for Nvidia investors who see the stock as a limitless bet on an AI future. The company's shares have added 66% this year after more than tripling in 2023.

“We have seen time and again that when investors fall in love with the idea of the technology innovation du jour, logic takes a back seat” Adam Sarhan, founder and CEO of 50 Park Investments, said in an interview. “And when emotion takes over, sky is the limit.” 

There are plenty of differences between Nvidia and Tesla, from the products they make to the personalities of the men that run the companies. But the parallels are striking. 

Nvidia's rise from niche chipmaker to one of the biggest companies in the world is based on the premise that its phenomenal sales growth over the past year has staying power. Tesla's big breakout rally, which occurred in 2020 and put its valuation well over $1.2 trillion, was pinned on the assumption that EVs would be adopted widely and quickly, and that it would be the company to dominate that market. 

But reality has interrupted that story. Demand for EVs is slowing as the wave of enthusiastic first