Already a subscriber?Speculators hoping for a replay of 2021’s meme stock trading frenzy will be sorely disappointed. Back then, it took nine months for the meme stock excitement to subside. This time, it’s taken only days for the frenzy around GameStop to dissolve.
But regulators in the United States are also more alert to the risk that the spike in the meme stocks reflects co-ordinated trading by a small group of market participants who plan to pump up the stock and then sell into the bubble they create, rather than buying by a collection of independent retail investors.
But analysts warn these low cash levels mean that fund managers have little ammunition, which could leave stocks vulnerable if there’s a sudden correction. After all, enthusiasm about AI has been driving the latest sharemarket rally, as shown by the surge in Nvidia’s stock to the point where the US chipmaker is now worth $US2.83 trillion , which is just over than 6 per cent of the S&P 500’s market value.“The rate of improvement for AIs is slowing, and there appear to be fewer applications than originally imagined for even the most capable of them. It is wildly expensive to build and run AI,” it reported.