there is no doubt. Nvidia (NASDAQ:NVDA) has been the hottest stock of the generative artificial intelligence (AI) era.
The specialist in graphics processing units (GPUs) and AI hardware has added more than $2 trillion to its market capitalization since ChatGPT’s launch, well ahead of any other stock, and its shares are up about 700 % since the start of 2023.
While some billionaires caught on to this trend early on, buying Nvidia stock as the disruptive potential of generative AI became evident, it now appears that many of these investors are beginning to believe its momentum has petered out. According to hedge fund tracker WhaleWisdom, more major investors reduced their holdings in Nvidia than increased their holdings in the first quarter: 207 hedge funds increased their holdings in Nvidia in the first quarter, compared to 269 in the fourth quarter. At the same time, 336 hedge funds reduced their stakes in the chip giant, about 60% more than the number of hedge funds that added to their positions.
Billionaires selling Nvidia shares included Ken Griffin of Citadel, Israel Englander of Millennium Management and Paul Tudor Jones of Tudor Investment Group.
This trend seems to be a sign of fatigue around the stock, and these hedge fund managers are taking advantage of the opportunity to lock in their profits.
Reasons to sell
Hedge fund managers’ 13F filings don’t come with commentary, but investors can make some educated guesses about why these Wall Street luminaries are selling these stocks.
Removing some benefits seems like the most obvious reason, especially considering recent rumors that capital gains tax rates for the wealthy could be increased. Berkshire Hathaway CEO Warren Buffett said that was one of the reasons his company sold shares of Apple in the first trimester.
Another reason is that more competition is underway. Advanced microsystems And Intel have both launched competing data center GPUs and technology companies such as Metaplatforms And Microsoft are also developing their own AI-enabled chips in-house to reduce their dependence on Nvidia.
Billionaire investor Stanley Druckenmiller explained his decision to begin liquidating his stake in Nvidia, saying much of what his company had recognized earlier in the stock was now recognized by the broader market. Indeed, Nvidia’s dominance of the AI chip sector and its meteoric growth have become evident.
What Billionaire Investors Are Buying Instead
Hedge fund managers who sell Nvidia stock are buying a wide range of companies for them, but you might be surprised to learn that one of the picks to replace Nvidia has been Ford Motor Company (NYSE:F).
Citadel, Millennium Management and Tudor Investment Group were all among the hedge funds that bought Ford last quarter. Citadel added 5.45 million shares and Millennium Management added 7.34 million shares. Tudor added 1.76 million shares, but that made Ford one of its biggest purchases of the…
