Billionaires Are Deciding to Sell Shares of This Well-Known Stock

The hottest stock in the market over the past couple of years has been Nvidia (NASDAQ: NVDA). As artificial intelligence (AI) technology advanced, Nvidia capitalized, having prepared for this revolution over the past two decades.

But after Nvidia's stratospheric rise, several major hedge funds and technology-focused mutual funds recently took some or all of their Nvidia chips (pun intended) off the table. Here are three major investors who got out before this summer's swoon.

Baillie Gifford trims its largest position

Perhaps the most "bullish" sale of Nvidia stock last quarter came from one of its biggest supporters, Baillie Gifford. The $128.4 billion mutual fund based in Edinburgh, Scotland, is regarded as one of the best technology growth stock investors in the world.

In the second quarter, Baillie sold a whopping 21 million shares in Nvidia, decreasing its position by 20.3%.

But that doesn't mean Nvidia shareholders should panic. Nvidia remained Baillie's largest holding, at 7.9% of its portfolio, even after this big trim. Many mutual funds have caps on the size of positions they can take, and many portfolio managers tend to rebalance after a holding appreciates to a big allocation. That appears to be what's happening here.

So, investors may not be concerned over Baillie slashing its Nvidia stake.

David Tepper's Appaloosa sells most of its stake

Perhaps more bearish than Baillie was the big 84% hack to Appaloosa Management's Nvidia position.

Appaloosa is run by the legendary value investor David Tepper, who was one of the top-performing hedge fund managers of his generation. After founding Appaloosa in 1993, Tepper compounded his investors' wealth by a staggering 40% over the next 20 years.

Appaloosa did benefit handsomely from its Nvidia holding through the first quarter of 2024, as it had been a top 10 position for the hedge fund in the first quarter. However, it appears Tepper and his team slashed that stake by 84% in Q2, lowering the allocation from 5.91% at the end of Q1 to just a 1.38% position as of June 30. Nvidia went from a top 10 holding to the 25th–largest position out of just 37 long positions.

Interestingly, Tepper still appears to believe in technology and AI, as his top positions include Alibaba (NYSE: BABA) and several other Magnificent Seven stocks. So, this big trim may have been either valuation-related or that Tepper potentially sees competition for Nvidia on the horizon. After all, he also holds Advanced Micro Devices (NASDAQ: AMD) in a larger allocation now, which has come out with its MI300 graphics processing unit (GPU) this year, as well as all the major cloud infrastructure players now designing their own accelerators for AI in-house.