Bridgewater has made a bold move by selling off Nvidia shares and increasing its stakes in AMD, Palantir, and Super Micro Computer. What’s driving this shift in strategy, and why might it not align with the goals of a typical retail investor?
Bridgewater Associates, one of the largest hedge funds in the world, founded by Ray Dalio in 1975, has recently made notable changes to its portfolio.
In a move that caught many by surprise, the firm drastically reduced its exposure to Nvidia (NVDA), selling 1.8 million shares during the third quarter of 2024.
At the same time, Bridgewater increased its stakes in Super Micro Computer (SMCI), Palantir Technologies (PLTR), and Advanced Micro Devices (AMD).
These adjustments raise important questions about Bridgewater’s strategy and the long-term outlook for these stocks.
Nvidia’s 2024 Performance: A Banner Year
Nvidia has had an exceptional year, with its stock price soaring by 85% through December.
The demand for its GPUs — critical for technologies like generative AI and cloud computing— has consistently outperformed expectations, solidifying Nvidia’s position as a leader in the AI sector.
With a market capitalization of $3.39 trillion and an operating margin of 55.69%, Nvidia continues to be a dominant force in technology.
So why did Bridgewater decide to reduce its position in this high-flying stock?
Nvidia’s 2024 Performance: A Banner Year
While Nvidia has thrived, Super Micro Computer has struggled in 2024, with its stock dropping by 38% amid slowing demand for server hardware and concerns about margin sustainability.
Despite this, Bridgewater increased its stake in the company, buying more than 1.4 million shares in Q3, bringing its total holdings to over 1.6 million.
This suggests that Bridgewater sees potential for a rebound in the demand for high-performance server solutions, even in the face of current challenges.
Nvidia vs. AMD: A Comparison
Bridgewater’s increased position in Palantir Technologies is particularly interesting, as the company is set to join the Nasdaq 100.
This inclusion will provide Palantir with greater visibility and attract capital inflows from index-linked funds and ETFs.
Although Palantir’s business model remains volatile—especially with over 50% of its revenue tied to U.S. government contracts—Bridgewater purchased another 437,000 shares in Q3, raising its total to more than 523,000 shares.
Advanced Micro Devices: A Conservative Play
Compared to Nvidia, Advanced Micro Devices (AMD) offers a more conservative investment option.
While AMD is not as dominant as Nvidia in the AI GPU market, the company has steadily gained market share with its competitive products.
AMD’s lower price-to-earnings ratio makes it an attractive option for investors seeking value, though its stock has not seen the same meteoric rise as Nvidia’s.
In Q3 2024, Bridgewater added to its AMD position, bringing its holdings to 1.5 million shares.
This signals confidence in AMD’s long-term potential, particularly as it continues to make inroads in AI and semiconductor markets.
Nvidia vs. AMD: A Comparison
While Nvidia remains the leader in AI GPUs, AMD is carving out significant market space with its lower-priced offerings.
Nvidia’s stock has surged in 2024, but its price-to-earnings ratio has exceeded 80x, which some analysts see as unsustainable.
On the other hand, AMD, with a P/E ratio around 25x, represents a more affordable option, despite not yet matching Nvidia’s technological lead.
Is Selling Nvidia the Right Move?
Bridgewater’s decision to reduce its position in Nvidia reflects a strategic approach.
After a stellar year, locking in profits is a logical move, particularly as the stock has become quite expensive.
By diversifying into more reasonably priced stocks like AMD and Palantir, Bridgewater is positioning itself for long-term growth.
While Nvidia’s leadership in the AI space is likely to continue, its high valuation may limit further upside.
In contrast, AMD and Palantir offer promising opportunities at more attractive price points.
Ultimately, Bridgewater’s move demonstrates a shift toward balanced growth, which may align better with the fund’s objectives and risk tolerance compared to retail investors.
Original article published on Money.it Italy 2024-12-05 09:08:00. Original title: Conviene vendere le azioni NVIDIA oggi?
