Nvidia (NASDAQ:NVDA) is the hottest stock on Wall Street. It’s been in the headlines for the past few years. Artificial intelligence (AI) It controls about 90% of the incredibly lucrative chip supply market. As earnings soared, so did the stock price. It has increased by more than 1,000% since the second half of 2022.
The semiconductor giant is popular not only with individual investors but also with funds across Wall Street. So why did Ken Griffin and the Citadel team sell a large portion of their stake?
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Citadel Securities is a giant hedge fund known as one of Wall Street’s most successful institutional investors. This year, my company was kind to me. Combined net trading revenue for the first two quarters of 2024 was up 81% year-over-year, with Citadel generating nearly $5 billion.
Part of that $5 billion came from the sale of just under 9.3 million Nvidia shares, nearly 80% of Citadel’s stock. At an average price of approximately $107 per share, the move netted the company a profit of $993 million.
Mr. Griffin’s fund must report the details of these trades to the Securities and Exchange Commission quarterly, but there is no other information that would give us a clue as to what Mr. Griffin was thinking. His sale of 80% of his shares may seem concerning, but without further information, this is likely just a repositioning.
I’m sure he decided he was satisfied with the return on his investment, and since Nvidia was trading at or near all-time highs at the time, I think it was a perfect time to exit. I’m not going to read any further into this deal.
Incredibly, even after all the success NVIDIA has had over the past few years, it seems like there’s still a lot of road ahead. Companies around Silicon Valley are competing, which means billions of dollars will continue to flow into Nvidia’s coffers. Alphabet CEO Sundar Pichai said bluntly: “For us, the risk of underinvestment is dramatically greater than the risk of overinvestment.” That’s why the company plans to spend $50 billion in capital expenditures this year, up from $31 billion last year.
With the impending release of Blackwell, the next version of Nvidia’s AI-powered superchip, sales could accelerate further from their current peak levels. Nvidia was reportedly sold out of Blackwell for 12 months after launch. Despite the new chip coming to market, its current version, Hopper, remains in high demand and will likely continue to do so even after Blackwell’s launch.
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