Wall Street Traders Are Too Scared to Fight the AI Rally

For a lesson in the perils of being a skeptic on Wall Street when everyone else is a buyer, consider Rob Arnott, who made a sensible case five months ago that Nvidia Corp. had become a bubble.

“A textbook story of a Big Market Delusion” is how the venerable founder of Research Affiliates called it, citing extreme valuations after the shares quadrupled in just a year.

Since his September warning, however, the ‘bubble’ has gotten around $800 billion bigger — and the greatest risk right now is getting left behind in its wake.

“Never short-sell bubble stocks when they’re on a roll,” Arnott said this week. “But that doesn’t mean you have to own them.”

Wall Street isn’t deaf to the risks that gather when just a handful of high-valuation stocks dominate the market leader board, and Arnott’s view could ring true eventually. Yet after the world’s most valuable chipmaker smashed expectations with its blowout report Wednesday, the AI party is one nobody can afford to miss.