Hedge Funds Unload AI Darling Nvidia

Lone Pine, Third Point, Viking, and Sculptor are among the biggest sellers.


Illustration by II

The love affair that hedge funds have had with Nvidia — the maker of the superfast chips, or graphics processors, that make possible the large language model responsible for ChatGPT’s human-like writing — appears to be cooling.

While Nvidia had become the fifth most widely held stock of hedge funds by the end of the second quarter, some of the biggest funds sold all of their shares by September 30, according to the recent 13F disclosures of the funds’ publicly traded equities portfolios that are filed quarterly with the Securities and Exchange Commission.

The biggest sellers were Lone Pine Capital, which sold its 641,649 shares, Third Point, which dumped 500,000 shares, Viking Global Investors, which unloaded 312,400 shares, and Sculptor Capital, which shed 83,300 shares.

Lone Pine, Third Point, and Viking Global all took their initial positions in Nvidia during the second quarter, after the stock had already gained 175 percent for the year. During the third quarter, Nvidia shares gained only 2.8 percent, after jumping 50 percent during the second quarter of furious hedge fund buying.

At the end of June, Nvidia had made up 2 percent of Lone Pine’s $11 billion publicly traded equities portfolio, and 3 percent of the $6.8 billion portfolio of Third Point.

Soros Fund Management also sold out during the quarter, after initiating its position in the prior quarter.

Nvidia remains the biggest holding of Coatue, accounting for 10 percent of its publicly traded equities portfolio. The Nvidia position, which is valued at about $2.2 billion, is also the biggest hedge fund investment in Nvidia. Coatue sold a little more than 2 percent, or 103,930 shares, during the quarter.

D.E. Shaw is the next biggest hedge fund investor, owning a stake worth $1.6 billion after selling some 23 percent its holdings during the quarter.

Other prominent hedge fund holders added to their Nvidia stock holdings. These included Millennium Management, which boosted its holdings some 35 percent to $1.8 billion, Citadel Advisors, whose stock holdings rose 56 percent to $1 billion, and Tiger Global, which increased its stake by 77 percent to $543 million.

Other hedge funds that had jumped into the stock during the second quarter and which added to their stakes during the third quarter, included Suvretta Capital, Senator, and D1 Capital.

Valiant, which also got in during the second quarter, sold 24 percent of its stock.

Three pension funds with large positions in Nvidia also reduced their holdings slightly. The California State Teachers Retirement System sold 3.7 percent of its stake, but still owns $1.9 billion worth of Nvidia. New York State Common Retirement Fund sold 5 percent of its holdings but still has $1.85 billion of the stock, and the New York State Teachers Retirement System sold 3.9 percent of its shares. New York State held onto $1.3 billion of the stock.

The introduction of ChatGPT last November sent the market on an AI tear early in the year, and no company has benefited more than Nvidia. The stock is still up 238 percent for the year.