Investors are replacing their Nvidia positions with other stocks
Nvidia has been one of the most surging stocks of the year. The chip maker’s stock increased almost seven times over the past two years, and its market cap increased by $2 trillion, riding the AI wave. However, investors’ sentiment is now changing.
Also read: Nvidia surpasses Apple, becomes world’s second most valuable company
Nvidia stock is still one of the top performers, but hedge fund tracker WhaleWisdom revealed that prominent investors are selling their chip maker shares. Only 207 asset management firms increased their stake in Nvidia during the first quarter of fiscal year 2024. Comparatively, it is less than the fourth quarter of 2023, when 269 hedge funds bought into the semiconductor giant.
Nvidia is not out of the ring
After an amazing bull run, investors are taking profits as there is some degree of weariness around Nvidia stock. Investors think that the stock is running out of momentum according to some publications such as The Motley Fool. CNBC also quoted Morgan Stanley suggesting other stocks despite the fact that Nvidia marked an all-time high of $135 just two weeks ago on June 18. 13F filings of different hedge funds give some hints about the selling decisions.
It is important to note that 13F filings are quarterly reports filed by institutional investment managers with the US Securities and Exchange Commission (SEC). The recent 13F filings show that a prominent asset manager, Stanley Druckenmiller, sold 71% of his Nvidia holdings. Speaking to CNBC in April, Druckenmiller said,
“We did cut that position and a lot of other positions in late March. I just need a break. We’ve had a hell of a run. A lot of what we recognized has become recognized by the marketplace now.”
Amazon was seen as the only stock that retained a 100% ownership rating among the top investors. However, the interesting fact is that Nvidia still has the highest average portfolio weight of 10.53%
Asset managers such as Matrix, Coatue, and Light Street have sold their stakes in Nvidia by up to 68%. At the same time, Cowen and Company LLC, Whale Rock, and Maverick increased the number of Nvidia shares in their portfolio.
Chinese tech giants and US automakers are attracting investors
It is not that Nvidia has completely lost its charm to investors. Even though investors are changing their positions, Nvidia remains a solid stock. Druckenmiller said in the same CNBC interview that, “I will be very surprised if I don’t own Nvidia on and off next ten years.” He added he is bullish on AI.
Hedge funds are also increasing their stakes in Chinese tech giants. For example, Appaloosa Management’s 13F filings show that 25% of its funds are invested in Chinese stocks. Appaloosa has a Funds Under Management (AUM) value of $6.75 billion, and its largest position is in Alibaba, with 12.05%. Appaloosa also reduced its Nvidia holdings.
Scion Asset Management is also bullish on China and it has invested 9.53% of its funds in JD and 8.74% in Alibaba. Ford has also emerged as an investment option as Tudor Investment Group and Millennium Management have replaced Nvidia with its shares.
Hedge funds generally had a positive view of the good old Ford Motor Company, with 116 funds adding it to their portfolios, and only 92 sold their positions in the automaker. Another notable option from the 13F filings is Instacart. The grocery provider Instacart market cap has increased by 37% year to date. D1 Capital has invested 16.4% of its portfolio in Instacart.
Also read: Huawei fills Nvidia gap in China by supplying locally produced AI chips
Taiwan Semiconductor (TSMC) also shows a consensus rating of 62.50% which is almost the same as Nvidia. The only concern about TSMC is the risk of a Chinese attack on the country, but the company’s 51% growth year to date hints at investors’ confidence.
According to a report by The Motley Fool, Palantir is also a good option for investors looking to benefit from the AI tailwinds. Palantir is not a household name like Microsoft or Amazon, but neither was Nvidia a year back. However, its customers are mostly larger organizations and government bodies. AI plays a huge role in data-related businesses. Palantir is a data collection and analytics service provider, and its nature of business requires long-term contracts with customers, which, according to the report, makes it a good choice.
Cryptopolitan reporting by Aamir Sheikh
