Details Cookies
Cookie Policy

This website uses cookies to offer you a better browsing experience by enabling, optimising and analysing site operations, as well as to provide personalised ad content and allow you to connect to social media. By choosing “Accept all” you consent to the use of cookies and the related processing of personal data. Select “Manage consent” to manage your consent preferences. You can change your preferences or retract your consent at any time via the cookie policy page. Please view our cookie policy here and our privacy policy here

Nvidia disconnects from technology stocks on Bitcoin rally and AI hype Nvidia disconnects from technology stocks on Bitcoin rally and AI hype Nvidia disconnects from technology stocks on Bitcoin rally and AI hype

Nvidia disconnects from technology stocks on Bitcoin rally and AI hype

Peter Garnry

Head of Equity Strategy

Summary:  Nvidia is a fantastic company with an incredible product but this year's rally in Bitcoin because of animal spirits earlier this year and recently the banking crisis has helped fuel the outlook and the share price up 79% year-to-date. The recent version of ChatGPT and comments from Bill Gates that the technology will change the world forever have also helped lift sentiment as these large language models behind ChatGPT are trained using ultra-fast GPUs such as those from Nvidia. Despite the rosy outlook investors are getting ahead of themselves and Nvidia's valuation is now significantly detached from technology sector posing a risk to investors.

A puzzling winner from the banking crisis and dangerous valuation

Nvidia shares are up 79% this year rallying initially with the rise Bitcoin and other high beta technology stocks such as Tesla. From the past we know that there is a strong link between Bitcoin and Nvidia as the company’s GPUs are used in Bitcoin mining and there is a consistent lag from falling or rising Bitcoin prices into the both the share price and revenue of Nvidia. The company itself has never acknowledged this link and refuse to talk about.

The banking crisis over the past two weeks has added more momentum to Bitcoin and for the first time since the launch of Bitcoin the community has a brewing crisis in the deposit system which is used to argue that it is more safe to have money in Bitcoin. Both gold and Bitcoin can at this point be viewed as proxies for the confidence in the banking system and higher Bitcoin prices help on mining activity and thus the market is betting on an improving outlook for Nvidia.

Nvidia share price | Source: Saxo
Bitcoin | Source: Bloomberg

Retail investors are significantly overweight Nvidia and technology stocks in general. Besides the rally in Bitcoin, the hype around AI and ChatGPT has also lifted sentiment, but Nvidia’s valuation has been pushed to alarming levels. Nvidia’s 12-month forward EV/Sales ratio is now 20.7x compared to an average of 5.9x for other highly profitable technology companies such as Microsoft, Apple, Alphabet, AMD, and Meta. This spread is a 3.5 times premium over high quality and growing technology companies. The spread to AMD which GPUs are a competing and good product is just dangerous underpinning that investors are getting too excited over Nvidia. We like the company, the technology, and the outlook (more on that below), but investors can pay a too steep a price even for good companies. Remember, equity returns are a function of changing expectations, so further gains in the share price will have to come from lifting already excessive expectations.

The prospects of ChatGPT

The hype around AI and ChatGPT had a small meaningful impact on the share price back in December before declining with the rest of technology stocks. This year the AI hype has extended as the fourth version of ChatGPT got closer (14 March) and this was the next contributing factor to Nvidia’s strong returns. The old version of ChatGPT was impressive but the new version comes with new exciting features such as visual input, which could be uploading a document and ask questions about it. It can even program a small Pong video game in 60 seconds. From the ChatGPT 4 presentation we can also see that it much better in its accuracy across a wide range of topics. The technology has even got Bill Gates to say that it will change our world.

The technology still comes with a large error and thus it is far from perfect and this is where the hype gets too much. Everyone, including us, are excited about ChatGPT, but it is not even close to AGI. But it could bring productivity gains in rudimentary tasks and be our digital assistant which will have some value. Even a new worker title has been invented because of ChatGPT and that is “prompt engineering”.


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.