By Angela Palumbo
AI investors have a bad case of FOMO.
Marvell Technology's massive stock rally Tuesday is the latest signal that the "fear of missing out" on artificial intelligence is driving a lot of investors' decisions these days. But when market speculation overtakes a stock's actual fundamentals, the risks of a sharp -- and painful -- stock reversal become even greater.
After all, just a few words from Nvidia CEO Jensen Huang sent Marvell's shares soaring toward a record close. As the leader of one of the world's most important tech companies, Huang's comments certainly carry a lot of weight with investors who want to want to keep up with stocks they think will benefit from the AI revolution. That's why when Huang said Tuesday that Marvell is going to be the next trillion-dollar company, the stock surged 30% to a record close.
A move of that size based simply on a comment from a tech CEO is noteworthy, especially for a stock that was already up a significant amount this year. As of the market close on Monday, Marvell stock had skyrocketed 158% this year.
Marvell designs, develops, and sells custom integrated circuits for AI and optical-networking products. Shares of Marvell, along with other tech hardware stocks, have jumped on seemingly relentless demand for the hardware necessary to build AI data centers.
"You're basically looking at stocks that have had some version of either sharp uptrends or parabolic moves, moving even higher. That's a sign of speculation," Steve Sosnick, chief strategist at Interactive Brokers, told Barron's. "Anytime you see parabolic moves or linear vertical moves, that's telling you that it's less about a sober assessment of a company's prospects on a straight valuation basis than it is about people chasing momentum."
Sosnick noted that several of the tech companies whose stocks have seen major moves higher have also recently reported strong earnings results and guidance. Take another tech hardware player, Hewlett Packard Enterprise. Shares jumped 18% on Tuesday as markets digested the company's better-than-expected quarterly earnings that were pushed higher by increasing AI demand. But similarly to Marvell, the large one-day rally came after what had already been a strong year for the shares.
That's a positive, but such sizable moves still imply there's risk ahead.
"It becomes a question of, is this positive guidance being over-rewarded in the market?" Sosnick said.
The risk is that eventually, hyperscalers and other big spenders on tech hardware will pull back their investments. Any indication that a cloud giant like Microsoft is reining in their capital expenditures could lead to a selloff for some of these spending beneficiaries' shares.
That risk hasn't stopped investors from jumping in so far, though.
"It's like taking the Circle Line [cruise] when you go by the Statue of Liberty, everybody rushes to one side of the boat, and then the boat turns around, everybody rushes to the other side of the boat," Sosnick said. "Nobody wants to be left behind on a big move."
It isn't just hardware companies that are vulnerable to big swings.
Software stocks soared Monday after Huang said "this is actually an incredible time to be a software company." He argued that AI agents -- models that complete tasks for a user following a simple prompt -- won't put software companies out of business.
Huang's optimistic call followed a major selloff in the sector this year over fears that software could be replaced by AI, bringing on a so-called "SaaSpocalypse."
Even lesser-known stocks are reaping the benefits from speculative trading, too, as AI excitement spreads. Fluence Energy shares soared 44% on Monday after the advanced battery-energy-storage company -- along with Siemens and nVent Electric -- announced that it will work with Nvidia on developing data centers. And last month, Cerebras Systems, an AI chip maker, stock skyrocketed 68% on its first day of trading.
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 02, 2026 16:07 ET (20:07 GMT)
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