The battle of the hedge funds, but who will win?

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NVIDIA, the chipmaker powering the artificial intelligence revolution, has split the hedge fund world. As its share price soared 200 percent this year, some of the hedge fund industry’s sharpest minds are at odds over its future.

Ken Griffin's Citadel, fresh off a record $16 billion profit in 2022, has soured on NVIDIA. The fund sold about 500,000 shares last quarter, cutting its stake from $60 million to $19 million. DE Shaw, another quantitative giant, followed suit, more than halving its position to $1.4 billion.

These moves came just before August's market wobble, which saw NVIDIA shed $300 billion in value in a matter of days. Lucky timing? Perhaps. But it's worth noting that Citadel has form in spotting tech bubbles. In 2000, Griffin bet against overvalued dotcom stocks, a decision that cemented his reputation.

Yet for every seller, there's a buyer. Renaissance Technologies, the secretive firm founded by mathematics whizz Jim Simons, is doubling down on NVIDIA. It scooped up 1.5 million shares, bringing its holding to a hefty $867 million. Not to be outdone, Marshall Wace of London built a $1.5 billion stake.

These conflicting bets reflect a wider schism in views on AI. Is it the next internet, set to transform the world? Or are we in the grip of irrational exuberance? The fact that such well-resourced investors disagree so starkly suggests the jury is still out.

Source: Financial Times

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