Nvidia's rally faces headwinds as fund manager exits

2025-03-10 nvidia

New York, Monday, 10 March 2025.
A well-known fund manager recently divested their Nvidia position. This decision came after the company’s earnings report. The manager anticipates a shift in market dynamics. Factors include concerns about the sustainability of Nvidia’s growth. Broader market uncertainties and a potential AI selloff also played a role. Despite Nvidia’s positive performance, this move suggests caution. The manager saw indicators of a possible downturn. This action highlights the sensitive balance between high growth and market risks in the AI sector.

Fund manager’s perspective

Steve Weiss, the Short Hills Capital Partners founder, revealed he sold his Nvidia shares [2]. Weiss mentioned several concerns regarding Nvidia’s prospects [2]. These include increasing competition from companies like Apple, which are developing their own chips [2]. He also noted that China’s procurement of Nvidia chips through other countries and potential tariff implications for Taiwan Semiconductor Manufacturing could pose challenges [2]. Shares of NVIDIA closed up 1.92% on March 7, 2025 [7].

AI sector dynamics

Major AI stocks face difficulties gaining momentum as investors reassess their strategies [2]. Spending slowdown concerns contribute to this cautious outlook [2]. Gene Munster from Deepwater Asset Management anticipates a two-year AI bull run before a potential bubble burst [2]. Despite strong fundamentals, Munster acknowledges that bubble concerns shake confidence [2]. However, he maintains a belief that the AI trade will ultimately succeed [2].

Nvidia’s recent performance

Nvidia’s Q4 FY2025 earnings showcased an impressive performance [6]. The company’s net profit increased by 80% year-over-year [6]. Revenue growth, while slowing, reached a new high [6]. First-quarter guidance exceeded expectations, and production of Blackwell AI chips increased significantly [6]. Actual revenue was $39.33 billion, surpassing the estimate of $38.14 billion [6]. Actual earnings per share (EPS) were $0.89, exceeding the estimate of $0.80 [6].

Competitive landscape

Nvidia faces competition from various tech giants [2]. Apple, Qualcomm, AMD, Amazon, and Intel are all vying for market share in the AI and chip sectors [2]. DeepSeek’s R1 AI model demonstrated competitive capabilities [5]. It beat top-end models despite being trained on underpowered Nvidia chips [5]. Concerns linger about waning demand for Nvidia’s most expensive AI accelerators [5]. These competitive pressures could impact Nvidia’s market position and revenue potential [alert! ‘this is an inference based on the cited source’].

Bronnen

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