Billionaire Dan Loeb Exited Nvidia and Broadcom. Is He Calling the Top in AI Chips?

Dan Loeb's Third Point fund divested its remaining shares in Nvidia and Broadcom during the second quarter of 2023, as reported in their August 14 Form 13F filing. The firm sold approximately 190,000 Nvidia shares and 50,000 Broadcom shares by June 30, making up a small portion of their $4.7 billion portfolio. The fund did not explicitly state that they had called a top in AI chips.

Despite this, Nvidia's operating performance remained impressive, with Q2 revenue more than doubling to $96.2 billion, and management projecting a $108 billion figure for the next quarter. The sources assert that the sale of Nvidia and Broadcom shares may be attributed to portfolio management, valuation, or opportunity cost, rather than a clear industry view.

Other hedge funds did not mirror Third Point's decision to sell these stocks, indicating a divergence in perspectives. Third Point's reduced positions in Nvidia and Broadcom should not be interpreted as a forecast. Nvidia's short interest was limited, with 285.96 million shares sold short at the August 14 settlement. The article emphasizes the importance of not interpreting a single position change as a definitive call, and instead advises readers to consider the broader context of their investment decisions.