Hedge funds are betting billions that a stock loved by millennials is going to plummet (NVDA)

May 25, 2017 at 06:02 AM EDT

And while share prices across the technology industry as a whole have soared since the election, Nvidia has even more going for it than strength by association and the adoration of millennials. On Wednesday, SoftBank announced a $4 billion stake in the company, sending shares climbing as much as 3%.

Nvidia also turned in a blockbuster earnings report earlier this month, spiking 18%, the most in six months. The company was helped by strong demand for its chips that are used by major cloud computing providers in data centers.

In the grand scheme of things, this discrepancy between large institutions and individual investors is nothing new to the stock market. The tug-of-war is indicative of the scenario that usually plays out when a stock goes on a torrid run like the one seen by Nvidia.

Some people get drawn in by the hype and the prospect of a quick profit, while others get worried that valuations are overextended. In the end, the conflicting forces are healthy for the market, which is most susceptible to large shocks when euphoria is peaking.

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