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\n\t\t\t\t<\/p>\n\n\t\t\t\tWhat is happening in the tech sector right now?\t\t\t<\/h2>\n<\/p><\/div>\n\n
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<\/p>\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t0:31<\/time>Nvidia becomes 1st company to top $4 trillion valuation<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\t\t<\/span>
Rapid developments in artificial intelligence (AI) have led to a massive surge in investor purchases of technology stocks over the past few years because of the long-term expectations and seemingly infinite potential.<\/p>\n
Nvidia, which makes semiconductor chips and data centers that support AI systems, has seen its market capitalization grow to more than US$6 trillion in just a few years to become the world\u2019s most valuable company \u2014 more than Microsoft and Apple.<\/p>\n
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\u201cAI is driving the stock market, it\u2019s driving the economy in a lot of ways right now, and it\u2019s the tech sectors specifically, and Nvidia is kind of at the forefront of the AI push,\u201d says Sheluk.<\/p>\n
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\u201cIt\u2019s almost like Nvidia is now synonymous with AI, and they have seen actually quite good results in terms of both the growth of their business and the appreciation of their stock price over the course of this year.\u201d<\/p>\n
Although Nvidia\u2019s stock price has surged roughly 35 per cent so far this year, it has ridden a roller coaster of volatility to get there with dramatic changes in value day to day.<\/p>\n
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\n\t\t\tMore on Money<\/button>More videos<\/button>\n\t\t<\/p>\n<\/p><\/div>\nThis short-term performance can make some investors uneasy \u2014 especially if their retirements rely on these investments.<\/p>\n
In the case of Nvidia and other high profile companies that grow so quickly, ups and downs \u2014 or even stalling \u2014 stock prices can happen as some investors may be inclined to quickly sell their stock on the first perceived sign of a slowdown in that rapid growth.<\/p>\n
That\u2019s what happened this week.<\/p>\n
Publicly-traded companies that offer their stocks for purchase are legally required to disclose their earnings every quarter, or three-month period. On Aug. 27, Nvidia reported its second quarter results, and although the company did show some strong numbers including for sales of its chips and data centers, some investors were hoping for another blowout quarter.<\/p>\n
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The Nasdaq, which is a tech-heavy stock index, slipped on Thursday and Nvidia\u2019s shares were down 2.6 per cent in volatile trading. The broader S&P 500\u00a0technology sector reversed early gains and dropped 0.5 per cent while the chip index slipped 0.2 per cent.<\/p>\n
\u201cThe results were good and probably better than expected in a lot of respects, but the stock price was kind of neutral. It didn\u2019t react too positively,\u201d says Sheluk.<\/p>\n
\u201cCertainly when you set the bar very very high it becomes harder and harder to meet or exceed that bar and I think that\u2019s what Nvidia is experiencing right now.\u201d<\/p>\n
Sheluk goes on to say: \u201cNvidia\u2019s stock experienced explosive growth for the last several years, and when that happens, people tend to project that out into the future and the larger and larger you get the harder and harder it is to grow at such an exponential rate \u2014 so expectations are high.\u201d<\/p>\n\n\n\t\tTrending Now<\/span>\n\t<\/p>\n\n\n\n\t\t\t\t\t\t
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\n\t\t\t\t\tDuty-free shipping to U.S. ends Friday. Canadian businesses are \u2018fearful\u2019<\/span>\n\t\t\t<\/p>\n<\/p><\/div>\n<\/li>\n<\/ul>\n<\/section>\nIn the case of Tesla, growing demand for electric vehicles in the past few years caused its stock price to soar. But, as competition increases from companies like BYD in China, some investors have shown concerns Tesla may lose market share and sold the stock.<\/p>\n
Following these short-term updates may be nerve-racking for some investors, as Tesla\u2019s stock is down almost nine per cent so far this year, but in the past five years, it is still up almost 135 per cent.<\/p>\n
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Although there is short-term volatility in the tech sector, Sheluk says investment experts tend to focus on long-term results, so there still could be an opportunity for many looking to build a retirement portfolio that includes at least some stocks like Nvidia and others like it.<\/p>\n
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\n\t\t\t\t<\/p>\n\n\t\t\t\tDo technology and AI investments make sense for you?\t\t\t<\/h2>\n<\/p><\/div>\n\n
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Most financial experts will advise clients to diversify their portfolios to help manage their risk. This means it\u2019s important to not put all your eggs in one basket by focusing too much on one particular investment or sector, but instead to spread out your money to add variety.<\/p>\n
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This could include having at least some money invested in the tech sector for certain individuals.<\/p>\n
\u201cI don\u2019t think as an investor, you should be running away from tech stocks. I don\u2019t want to give that impression whatsoever. I think pretty much every investor that\u2019s out there, if you\u2019re having a diversified portfolio, you should probably have a material part of your portfolio invested in the technology sector,\u201d says Sheluk.<\/p>\n
\u201cBut, if you\u2019re going to be very focused on the AI segment especially, you have to be very comfortable with the volatility,\u201d Sheluk added.<\/p>\n
\u201cThis uncertainty can make us uncomfortable, the value of investing is being able to sit through some of those periods of time and remain resilient, patient, and if you\u2019re a little bit more hands-off, generally portfolios are going to grow successfully over time.\u201d<\/p>\n
\u2013with a file from Reuters.<\/em><\/p>\n<\/p><\/div>\n\n
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