Hedge Funds Double Down on Nvidia, Reduce AMD Stakes

Hedge Funds Embrace Nvidia, Trim AMD as AI Hype Soars

Hedge funds boosted their Nvidia (NASDAQ: NVDA) holdings in Q1 2024, riding the AI wave, while reducing positions in AMD (NASDAQ: AMD). This strategic pivot underscores the growing focus on AI-driven growth.

A Deep Dive into Hedge Fund Strategies

Hedge funds have been rebalancing their portfolios, with a notable shift towards Nvidia Corp. (NASDAQ: NVDA) in the first quarter of 2024. This adjustment comes as Nvidia continues to dominate the AI sector, positioning itself as a critical player in the technology landscape. According to Bloomberg's analysis of 13F filings, Nvidia saw the largest increase in market value among single stocks, despite an overall net sell-off by hedge funds. The AI leader's shares climbed 0.5% amid this increased interest.

In contrast, Advanced Micro Devices Inc. (NASDAQ: AMD) experienced a reduction in hedge fund holdings. The reallocation reflects a strategic move by institutional investors to capitalize on Nvidia's AI advancements while reevaluating their positions in AMD.

Hedge funds also increased their stakes in other tech giants like Amazon.com Inc. (NASDAQ: AMZN), Meta Platforms Inc. (NASDAQ: META), and Microsoft Corp. (NASDAQ: MSFT). These moves highlight a broader trend towards consolidating investments in leading technology companies poised to benefit from AI growth.

Key Highlights from Hedge Fund Activities:

• Berkshire Hathaway: Warren Buffett's firm revealed a stake in Chubb Ltd., sending Chubb's shares up by 11%, the highest since November 2008. However, Berkshire Hathaway also trimmed its holdings in Apple Inc. (NASDAQ: AAPL), even though Apple remains its largest holding at 41% of assets.
• Tiger Global Management: Increased its stake in Alphabet Inc. Class A (NASDAQ: GOOGL) and boosted positions in Amazon.com.
• Renaissance Technologies: Exited Exxon Mobil Corp. (NYSE: XOM) and added Chevron Corp. (NYSE: CVX), with a notable shift towards financial stocks.
• Two Sigma Advisers: Added Walmart Inc. (NYSE: WMT) while boosting health care stocks like Humana Inc. (NYSE: HUM), and decreased technology sector exposure, including AMD.
• Michael Burry’s Scion Asset Management: Exited positions in Oracle Corp. (NYSE: ORCL) and Alphabet Inc. Class A, with JD.com Inc. Class A (NASDAQ: JD) as its largest holding.

Overall, the technology sector continues to dominate hedge fund portfolios, accounting for 28% of their holdings, followed by consumer discretionary at 14%. The total value of combined holdings reached $1.887 trillion, up from $1.728 trillion three months earlier.

The S&P 500 rose 10% in the first three months of 2024, reaching an all-time high, while the Nasdaq 100 Index gained 8.5%. As Wall Street fund managers keep an eye on the Federal Reserve's interest rate outlook, these strategic shifts in hedge fund portfolios highlight a strong preference for technology stocks, particularly those leading in AI innovation.

Hedge funds' increasing bets on Nvidia and trimming of AMD reflect the evolving dynamics within the tech sector. As AI continues to shape the future, Nvidia’s leadership position makes it a favored choice among institutional investors.