(Bloomberg) -- Retail traders are riding the wave of AI mania that’s swamped Wall Street, looking beyond Nvidia Corp. and C3.ai Inc. for the next stocks to pop.
“FOMO looks to be kicking in,” according to Vanda’s Marco Iachini, who said individual investors are now looking beyond the large-cap stocks which were initial targets.
The day-trading crowd has piled into the likes of Palantir Technologies Inc., Marvell Technology Inc. and UiPath Inc., pushing in millions over the past week, data from Vanda Research show. That comes as the trio rallies in the wake of Nvidia’s blowout results and Wall Street mavens from Steve Cohen to Stan Druckenmiller tout the technology’s potential.
While retail traders are still snapping up shares of Nvidia — they’ve plowed $285 million into the company over a five-day span — the activity is unlikely to kick-start another leg higher for the company, according to Iachini.
“Past episodes of thematic buying around similar large-cap names lead us to believe retail traders will show a greater propensity to buy less popular AI-related firms for which they perceive upside potential is greater,” he wrote in a note to clients Thursday.
C3.ai, which has erased one-fifth of its value in the past two days, may underperform in the coming weeks if retail traders opt to cash in on their profits and rotate to other lagging AI stocks. The retail crowd has bought $85 million worth of the company’s stock in a week, roughly matching the level of excitement seen earlier this year when an initial frenzy among smaller stocks triggered rallies and sparked debate among investors.
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