:max_bytes(150000):strip_icc()/GettyImages-2152107470-14132d292fa6404e9c4463fd0580b96d.jpg "Peter Thiel’s Hedge Fund Dumped Nvidia Shares Just Before Its Big Earnings Report")
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Key Takeaways
- Thiel Marco, the hedge fund run by PayPal and Palantir founder Peter Thiel, sold its entire stake in Nvidia last quarter, joining a list of investors who’ve cashed out of the AI darling in recent months.
- AI sentiment has deteriorated in recent weeks amid debates about elevated stock valuations, unorthodox deals between suppliers and customers, and doubts about the return on AI investments.
While everybody is watching for Nvidia’s earnings report tomorrow, a few big investors have already taken their chips off the table.
Thiel Macro, tech titan Peter Thiel’s hedge fund, revealed in a regulatory filing late last week that it sold its entire stake in the AI bellwether during the third quarter. The 537,742 shares the firm held heading into the quarter would have been worth approximately $100 million at the end of September.
While people may sell assets for all sorts of reasons, Thiel joins a growing list of heavy hitters whose Nvidia (NVDA) moves have lately raised eyebrows on Wall Street. Japanese investment firm SoftBank revealed last week that it sold its entire Nvidia stake in October, raising about $5.8 billion. (Executives said the position was liquidated to fund investments in another AI darling, OpenAI.)
Why This Is Important
Nvidia, which dominates the market for accelerated computing chips, has benefited more concretely from the AI investment boom than nearly any other U.S. company. An increasingly bearish outlook for its stock could spell trouble for more speculative AI bets. Some investors aren’t waiting for its next earnings report to make that call.
Others have outright bet against Nvidia. Scion Asset Management, run by Michael Burry, the hedge fund manager of “The Big Short” fame, revealed earlier this month that it sold short Nvidia shares valued at $186 million in the third quarter. (Scion also had a short bet against Palantir (PLTR), the data analytics firm Thiel founded in 2003, valued at more than $900 million at the end of the quarter.)
Some on Wall Street are increasingly worried that the AI boom is actually an AI bubble. They point to elevated stock valuations, uncertainty about AI’s revenue potential, and a series of circular deals between vendors and customers as causes for concern. AI bulls contend that valuations are modest compared with the Dotcom Bubble, to which the current investment cycle is frequently compared, and remind skeptics that AI investment is being driven by hugely profitable tech businesses.
The bubble debate has weighed on AI sentiment and stocks heading into one of Wall Street’s most important recurring events: Nvidia’s quarterly earnings report, scheduled for Wednesday afternoon.
High-flying AI stocks like Palantir, Applovin (APP), and Super Micro Computer (SMCI) are among the S&P 500’s worst performers over the past week. Shares of Nvidia and Microsoft (MSFT) fell Tuesday even after they announced a cloud computing deal with startup Anthropic, the kind of tie-up that months ago might have been sure to boost socks.
Nvidia shares have fallen more than 10% since late October, when it became the first company in history to be worth $5 trillion. Nonetheless, Wall Street’s expectations are still high heading into Wednesday’s report, with analysts predicting big tech’s aggressive investments will drive a solid quarter for the chipmaker.
