AI market: What investors should watch for amid Nvidia surge

YouTube Host Matt Kohrs joins Yahoo Finance Live to discuss the rise of Nvidia stock, what investors should watch for in the AI play for stocks, and the fall of Icahn shares following Ackman's remarks on the Hindenburg Report.

Video transcript

- Well, it's certainly been an eventful year thus far for investors and the chaotic ride is far from over, as debt ceiling deadlines and inflation still remain among the top concerns for markets. While investors are also keeping a close eye on AI plays in video shares rallying today after displaying the wonders of an AI-fueled earnings report, one can say that the artificial intelligence hype is very much alive. And well here to discuss all of this and more is Matt Kohrs. He's host of "The Matt Kohrs Show," Matt, it's great to have you here on set.

So we're looking at gains of 25% today for NVIDIA. You have a great pulse on the retail trader, the retail investor. What's been-- what is their reaction been to the massive climb that we've seen in NVIDIA and whether or not this hype is going to continue.

MATT KOHRS: Nothing but pure excitement. And I feel like they've been calling it out for actually many months now, because everyone's been using ChatGPT and other forms of AI. The discussion has been there. And I would say the major names are NVIDIA and Microsoft, obviously, the connection to open AI. But excitement and, hey, the market agrees with it as well.

- Matt, I'm going to play the contrary and take your-- not necessarily my take, but we have seen excitement around technology before. And I'm thinking about something like crypto, not necessarily Bitcoin, but just what we saw in somebody, a player like NVIDIA, some of these chip makers when we are seeing significant upside in the crypto space. How do you look at this in relation to some other emerging technologies and the rallies that we've seen on the back of that?

MATT KOHRS: I guess, on a comparative value right now, if you were to do a basic fundamental breakdown, I think most people would agree that NVIDIA is yes, fundamentally overvalued. But then that brings up a very interesting argument of-- what is value? Is that the full equation? Is value equal to fundamental value? Or is there a little bit more of a complication in there? And I would argue that, yes, value is fundamental value plus more of crowd support, maybe a little hype support, maybe a little bit of riding the wave.

So right now, I'm a massive fan of NVIDIA, and I think its future over the next couple of years is a very bright one. But in the short term, when you see explosions of this, I mean it ended yesterday at $750 billion, and now it might be close to being the ninth company being worth a trillion dollars. It seems like in the very short term, it's more of a high octane volatile trade, and I would be careful in both directions.

- Matt, when it comes to that excitement with AI, clearly NVIDIA, the massive beneficiary at least for today, and certainly has been given the position that they do have within the space. But what about some of the other established names that are out there when it comes to Google, Microsoft, even Meta, that has also been riding this AI boom, what do you make about that explosive growth that we've seen in some of those companies, specifically Meta, year to date?

MATT KOHRS: Well, with all of those, I think there's exciting things that are going to kind of play out over the next couple of years. So the first 30-- Amazon, Google, Microsoft, they're going to end up vertically integrating, if I had to assume here. They're not going to always just be purchasing their chips from NVIDIA or potential competitors, if they're able to end up scaling up. But with Meta right now, it feels like at first, there was such a focus on the Metaverse. And obviously, the market reacted very, very poorly to it.

And then when you slice a couple of jobs and get a little bit more into AI right now for a while, there if you said blockchain, blockchain, blockchain, your stock exploded. Now all you have to do is say AI over and over again--

- You've been seeing that.

MATT KOHRS: And you just add billions to your market cap. That's I guess what they're teaching at business school these days.

- You know Matt, that was exactly what I was referring to, better put than I said about emerging technologies really adding to the exuberance in the market. Let's talk about potential meme stocks, because you always got a good pulse on how retail investors are framing certain names. There's a debate going on about whether these regional banks have been-- can we say meme-fied, is that a word? I mean, what are you hearing about how they're looking at this space right now? And would you call it a meme stock?

MATT KOHRS: I feel like the term me, meme stock and what the retail investors are paying attention to, it's been changed so much over the past two, three years now. At first, it was just GameStop, because it was crazy. What happened, we were all in our sweatpants, on our couch. But now just so many things that played out, and it feels as if we're applying the word meme stock to just anything that generically retail is paying attention to or really just anything that has massive moves.

I mean, right now looking at the crazy movement in NVIDIA, why not just call that a meme stock because a lot of retail has been making a lot of money? So when it comes to banks, I wouldn't call it a meme stock. I would call it a highly volatile trade, so of course, a lot of retail traders are very interested in it, especially with the explosion of 0 DT options trading, so there's a lot of interest. But in terms of meme stock, I wouldn't necessarily say it really crosses over into that definition quite yet.

- And Matt, taking a look at one name that's certainly been very volatile, and I know you've been closely tracking the movements here lately, the losses that we're seeing in Icahn Enterprises, so initially, we got the short seller report from Hindenburg, and then we also just had Carl Icahn's-- I don't want to say enemy, but they certainly do not line up, maybe they are enemies, it's safe to say, Bill Ackman kind of piling on here, adding some of that fuel to the fire. What do you make of this back and forth and also just the fallout that we've seen in Icahn Enterprises?

MATT KOHRS: Honestly, NVIDIA is a crazy story right now. But I think IP and Icahn and Bill Ackman is my most exciting story right now. As I was walking to this set, there's another update that Icahn might sue Hindenburg, and they're also considering a share buyback, like literally within the past five minutes, so I find it fascinating. Hindenburg, making a very valid point of maybe a little bit overvalued compared to the net asset values, Ackman coming out. And I love this kind of coy game that they're playing of-- no, no, no, I'm totally not in the play, I'm not doing anything.

I don't know if he m I don't know if he isn't, Bill doesn't call me anymore. But anyway, it is a serious accusation. And apparently, as the market is really digesting Hindenburg's accusations, they're starting to agree. We fall in 60% and even then, relative to his peers, you could argue it's still trading at a premium. And for it being Ackman itself, a player who was notorious for saying, hey, mismanagement and using too much leverage, now that's exactly what he's being accused of. So it's a story of the battling of Goliath, and I'm really enjoying watching it play out.

- So in the last five days off just about 40%--