Tech Stocks Plunge. Meanwhile, Costco Surged to All-Time Highs.

Tech markets were volatile at the start of the week, with Wednesday providing some relief for tech-heavy investors. Nvidia’s quarterly earnings were described as incredibly impressive and beating estimates handsomely, yet the stock slid slightly in after-hours trading. The reaction was framed as unexpectedly muted given the strength of the results, especially after Nvidia had reached new highs following a long sideways period. The piece suggests that if Nvidia, viewed as less heated than other semiconductors, can drop on strong results, other more parabolic AI-related names could face greater downside. It also raises concern that reversals in overheated semis could drag down the rest of tech.

"They beat estimates handsomely, and the results probably should have fuelled a run in the stock. But, of course, the GPU giant saw its shares slide mildly, by just under 2%, in the after-hours session of trade. I'm not quite sure what the crowd was hoping for, but investors should have been conditioned to see a home run be met with pin-drop silence by now, or even a few boos by some who were looking for a reason to offload their positions."

"Simply put, there was a tough crowd for Nvidia going into its number, especially after shares broke out to new highs after a rather lengthy period of sideways action. Though I could be wrong, it's looking like Nvidia's incredible results and questionable reaction might cause some of the overheated parts of the AI tech trade to feel the pain again."

"If Nvidia, which has been less heated compared to the rest of the semis this year, is moving lower on spectacular results (and no, I'm not sugar-coating it despite the underwhelming investor reaction), I really do fear what could happen to some of the other parabolic names in the semi space."

"Of course, Michael Burry has already given his take on what he thinks could be the fate for stocks that have gone parabolic. But the real question is whether the many investors who are up big will be able to hang onto their gains as the overheated semis reverse course and run the risk of dragging the rest of tech down with it."

Read at 24/7 Wall St.