"High-stakes gambling" is happening, and there is a huge difference in the market's valuation and development potential for Nvidia. Citadel sold about 0.5 million shares of Nvidia stock in the second quarter of this year, while Elliott Management warned that Nvidia is in a bubble and AI is being overly hyped. Yet others are still enthusiastically buying in.
How long can the "AI faith" last? On the gold mine of Nvidia, Wall Street giants are competing fiercely. Some are bullish on buying, while others are eager to sell.
Some well-known hedge funds, such as Citadel and DE Shaw, reduced their holdings this month before the stock price plunged, while Renaissance and Marshall Wace increased their holdings. $NVIDIA (NVDA.US)$ Renaissance and Marshall Wace increased their holdings, while some well-known hedge funds like Citadel and DE Shaw reduced their holdings before the stock price plunged.
Such dramatically different attitudes indicate enormous differences in the market assessment of the AI giant's valuation and development potential.
A "bold bet" on Nvidia is unfolding on Wall Street.
According to US regulatory filings, the most successful hedge fund in history, Citadel, sold about 500,000 Nvidia shares in the second quarter of this year, reducing its holdings from $60 million at the end of March to $19 million at the end of June.
DE Shaw also reduced its holdings by more than half to $1.4 billion in value.
Elliott Management, founded by billionaire Paul Singer, also gave up its holding of 50,000 shares and warned investors that Nvidia is in a "bubble" and that AI is being "overhyped".
While some are cautiously selling Nvidia, others are choosing to add to their positions passionately.
Quantitative company Renaissance Technologies, founded by billionaire Jim Simons, bought 1.5 million shares of Nvidia, increasing its holdings to 7 million shares by the end of June, worth $867 million.
London-based Marshall Wace purchased approximately 3.7 million shares of Nvidia, valued at $1.5 billion.
These investors' bets drove Nvidia's share price to rise 150% in the first half of this year. After the US retail sales and employment data were released last night, confidence in the US economy was greatly strengthened and Nvidia's US stock rose 4.05%. Nvidia's current stock price is $122.86, and its market cap is $3 trillion.
"Technology stocks are investors' safe haven. People have been fluctuating," said Kevin Gordon, senior investment strategist at Charles Schwab, adding that crowded trades "exacerbated price declines".
Some analysts analyzed documents submitted to the Securities and Exchange Commission by 23 large hedge funds, which collectively hold $1.4 trillion in US stocks. The filings show that on average, they sold about 6% of their Nvidia shares.
Some hedge funds have begun to focus on other areas.
In Mag7, hedge funds on average increased positions in Apple and Microsoft, while reducing some holdings in Alphabet, Amazon, Meta, and Tesla.
Although tech and traditional industries remain investment hot spots, some hedge funds are beginning to explore new investment opportunities.
Hedge funds Baupost and Marshall Wace bought $30 million and $20 million worth of Herbalife stocks, respectively.
Although Herbalife's stock price has plunged in recent years and its performance reached the lowest point in 15 years in the second quarter of this year, compared to Nvidia, these two investment firms seem to be more bullish on its future.
Other hedge funds such as Qube Research are turning to Robinhood. During the epidemic, Robinhood became the center of the "meme stock" craze.
GameStop is also one of the hot meme stocks and its stock price has risen sharply this quarter due to the influence of social media.
Editor/Somer