Why Chasing the ‘Obvious’ AI Play Could Leave You Burned

When the coming gains in a stock are “obvious,” watch out. Sure, it’s easy to envision more upside in Super Micro Computer $Super Micro Computer(SMCI.US)$ stock after its epic bull run. However, if short-term traders have already assumed the best-case scenario for Super Micro Computer, then they have already made the easy money and it’s time to take profits.

Some value-conscious investors point to Nvidia $NVIDIA(NVDA.US)$ stock’s rally as a sign that the artificial intelligence market is too richly valued. Yet, there’s evidence that Super Micro Computer is actually more overvalued than Nvidia. This doesn’t mean you should short-sell Super Micro Computer stock, but cashing in some chips isn’t a terrible idea.