Hunting for the Next Nvidia Is No Easy Feat. Small-Cap Tech Stocks Promise Riches but Really Are Just Rags.

When retail investors watch mega-cap hyperscalers pull the broad indexes into a concentrated corner, the natural, contrarian response is to look downstream.

Believe me, I am not a big fan of small-cap stocks en masse. However, as I’ve noted here recently, I think that market conditions require us to look there, and just about everywhere that isn’t mega-cap AI stocks. Hey, who said investing was supposed to be comfortable?

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The logic seems bulletproof: If Nvidia (NVDA) and Broadcom (AVGO) are virtually printing money on artificial intelligence infrastructure, then the smaller, agile tech players must be getting ready to catch the secondary wave. Investors go hunting for an exclusive small-cap AI trade, expecting to find the tech giants of tomorrow trading at a deep discount today.

My conclusion is that it is going to be more difficult to do this via the index ETF approach. Stock by stock is more likely to work beyond a traders’ time frame. This is part of what I determined when hunting for good Chart of the Day candidates when I filled in for Barchart columnist Jim Van Meerten recently.