For the better part of the last four years, no innovation has sparked investor interest quite like the evolution of artificial intelligence (AI). Empowering software and systems with the tools to make autonomous, split-second decisions is a technology that PwC analysts believe can add $15.7 trillion to the global economy by 2030.
But the AI revolution doesn't happen without Nvidia (NVDA -0.03%), whose graphics processing units (GPUs) are the backbone of enterprise data centers.
Image source: Nvidia.
Nvidia's several generations of GPUs (Hopper, Blackwell, Blackwell Ultra, and Vera Rubin) are superior to competitors on a compute basis. What's more, CEO Jensen Huang's desire to bring an advanced chip to market annually ensures competitors will struggle to play catch-up. Perhaps it's no surprise that Nvidia shares have skyrocketed approximately 1,300% since the start of 2023, representing the addition of more than $4.6 trillion in market value.
While Nvidia's stratospheric data center sales growth and mid-70% gross margin indicate that it's firing on all cylinders, Form 13F filings suggest billionaire money managers and institutional investors are losing faith in the face of the AI revolution.
Billionaires and institutional money managers have been net sellers of Nvidia
A 13F is a required filing no later than 45 calendar days following the end of a quarter for institutional investors with at least $100 million in assets under management. WhaleWisdom.com, which aggregates 13F data, shows that 436 million fewer Nvidia shares were held on March 31 compared to Dec. 31.
Furthermore, three billionaire money managers were decisive sellers of Nvidia stock in the March-ended quarter:
- David Tepper of Appaloosa sold 228,500 shares (a 13% reduction from Dec. 31)
- Philippe Laffont of Coatue Management sold 2,871,718 shares (-31%)
- Dan Loeb of Third Point sold 2,760,000 shares (-94%)
NASDAQ: NVDA
Key Data Points
Given that Nvidia has been a top-performing AI stock, profit-taking is a logical explanation behind this selling. However, it may not be the only reason billionaires and institutional investors have begun to head for the exit.
Competitive pressures are a potential worry for Nvidia and its investors. While Huang's company is outshining its peers in compute capabilities, internal competition remains a serious threat.
Many of Nvidia's top customers by net sales are developing GPUs for their data centers. Even though these chips aren't as advanced as Nvidia's hardware and won't be sold externally, they're considerably cheaper and more accessible. In other words, they can take up valuable data center real estate and minimize the GPU scarcity that's fueled Nvidia's otherworldly pricing power and sky-high gross margin.
Stock market bubbles throughout history...
-- Geiger Capital (@Geiger_Capital) May 8, 2026
AI stocks now ~40% of the market. pic.twitter.com/RxSAh09k6F
The billionaire and institutional investor exodus might also be driven by historical precedent. Since the advent of the internet, every game-changing technology has endured an early innings bubble-bursting event. These bubbles form because investors consistently overestimate the timeline to widespread adoption and/or optimization.
Adoption is absolutely not an issue, with Wall Street's most influential businesses spending a small fortune to expand their AI infrastructure. However, businesses aren't particularly close to optimizing their deployed AI applications to maximize sales and profits. It took companies more than half a decade to optimize the internet in the late 1990s and early 2000s, and we'll likely witness a similar timeline to the evolution of AI.
If history rhymes and the AI bubble bursts, Nvidia stock would be hit hard.
