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How long can the "AI faith" last? Wall Street giants are competing fiercely for Nvidia's "gold mine", some buying enthusiastically, while others are eager to sell.

Some well-known hedge funds such as Citadel and DE Shaw cut their holdings before Nvidia's stock price plummeted this month, while Renaissance and Marshall Wace increased their holdings.

Such starkly different attitudes indicate that there are huge differences in the market's views on the valuation and development potential of this AI giant.

A "big bet" around Nvidia is taking place on Wall Street

According to U.S. regulatory filings, Citadel, the most successful hedge fund in history, sold about 500,000 shares of Nvidia in the second quarter of this year, with its holdings falling from $60 million at the end of March to $19 million at the end of June.

DE Shaw also cut its stake by more than half to $1.4 billion.

Paul Singer's Elliott Management also divested its 50,000-share position, warning investors that Nvidia is in a "bubble" and that artificial intelligence is "overhyped."

A "big gamble" is taking place. While some people are cautiously selling Nvidia, others are choosing to increase their holdings enthusiastically.

Renaissance Technologies, the quantitative firm founded by billionaire Jim Simons, bought 1.5 million shares, increasing its holding to 7 million shares, worth $867 million at the end of June.

London-based Marshall Wace also bought about 3.7 million shares, valuing its holding at $1.5 billion.

These investors' bets have pushed Nvidia's stock price up 150% in the first half of this year. After the release of US retail sales and employment data last night, the market's confidence in the US economy has greatly increased, pushing Nvidia's US stock price up 4.05%. Nvidia's current stock price is $122.86, with a market value of $3 trillion.

“Tech stocks were a safe haven for investors, and people were pulled along the way,” said Kevin Gordon, senior investment strategist at Charles Schwab, adding that the crowded trade “exacerbated the downside in stock prices.”

Analysts analyzed documents filed with the U.S. Securities and Exchange Commission by 23 large hedge funds that hold a total of $1.4 trillion in U.S. stocks. The documents show thatOn average, they sold about 6% of their Nvidia shares.

Some hedge funds are starting to look elsewhere

In Mag7, hedge funds on average increased their positions in Apple and Microsoft, while reducing some holdings in Alphabet, Amazon, Meta and Tesla.

Although technology stocks and traditional industries remain hot investment destinations, some hedge funds are beginning to explore new investment opportunities.

Hedge funds Baupost and Marshall Wace bought $30 million and $20 million of Herbalife shares, respectively.

Herbalife is a company that sells its products through the development of downline sales. Although Herbalife's stock price has plummeted in recent years and its performance reached a 15-year low in the second quarter of this year, these two investment companies seem to be more optimistic about its future than Nvidia.

Other hedge funds, such as Qube Research, are turning to Robinhood, which has become the center of the "meme stock" craze during the pandemic.

GameStop is also one of the hot meme stocks. Due to the influence of social media, its stock price rose sharply in the second quarter of this year.