Bridgewater Cut Nvidia 18% and More Than Doubled Vistra. Is It Rotating From Chips to Power?

Bridgewater Associates reshuffled its investments in Nvidia and Vistra during the second quarter, as disclosed in its August 14 filing. The firm decreased its Nvidia position by 18% to 3,866,195 shares while simultaneously increasing its Vistra stake by 116% to 751,695 shares. Although this appears to be a shift from chips to power, a Form 13F filing cannot determine the reasoning behind these trades.

Both Nvidia and Vistra serve distinct purposes in a diversified portfolio. Nvidia continues to be a strong growth engine, with revenue surging 106% to $96.2 billion in the latest quarter, while its data-center revenue rose 117% to $89 billion. The demand for accelerated computing outpaces supply, and Nvidia sells chips, networking, systems, and software across the expanding market.

However, valuation concerns and concentration risks, such as export controls limiting China and financing customers potentially blurring end demand and ecosystem support, should also be considered. An 18% reduction in Nvidia may simply manage this exposure. On the other hand, Vistra's appeal lies in its tangible scarcity, with existing nuclear and natural-gas plants capable of supporting data-center loads before new generation and transmission come online.

In the second quarter, Vistra's adjusted EBITDA rose more than 30% to $1.77 billion, and management reaffirmed full-year guidance of $6.8 billion to $7.6 billion. The firm also committed up to $1 billion to a digital-infrastructure venture with KKR, Kuwait Investment Authority, and Nvidia. Insider Monkey noted an increase in hedge-fund ownership for both companies, with Bridgewater's Nvidia reduction occurring in the same filing period as its Vistra increase.

While this change suggests a relative-value interpretation rather than a blanket rejection of chips, it does not prove power will outperform chips. Instead, it highlights a pertinent question: as AI infrastructure matures, will scarce megawatts generate more economic value than incremental accelerators? The context of Bridgewater's portfolio is crucial, as the two position changes may not indicate a direct substitution between the businesses or an expectation of one share price surpassing the other.

Although the potential for NVDA and VST as investments is acknowledged, other AI stocks with greater upside potential and lower downside risk are believed to be more advantageous.