Nvidia Dominates AI Chip Market, But Institutional Holders Show Unsettling Trend — Is The Spark Fading?

Nvidia Corp NVDA has taken a dominant position in the AI space and in the broader stock market.

The stock is up over 200% so far this year, on account of:

• the company exceeding investor expectations in terms of return
• the business delivering an EPS and revenue beat quarter after quarter
• market sentiment associated with the AI frenzy

Nvidia currently dominates 80% of the market for semiconductor chips that are needed to run AI applications. The business continues to hold promise as the TAM for its product continues to expand with the increasing adoption of artificial intelligence.

Nvidia is scheduled to report its Q3 2024 earnings on Nov. 21, and market analysts expect another beat.

Also Read: Jim Cramer Prefers Caution Despite Impressive Returns From ‘The Enormous Eight’ Led By Nvidia, Meta: ‘Each One Set Up Like Bowling Pins’

Yet, These Firms Are Shedding The Stock

While Nvidia’s past performance, business strength and future prospects should make one picture this stock as a keeper, Benzinga’s research indicates hedge funds and overall institutional ownership in the stock is on the decline. Let’s dig in.

Hedge Funds: Data from Whalewisdom indicates hedge funds own 9.3% of the stock (per Q2), compared to 10.3% in the previous quarter – a decline of 9.9%. The number of new positions taken by hedge funds also went down from 111 to 94, registering a decline of 15.3%.

When all 13F filers are included, the number gets worse, as there’s been a 14.22% decline in Nvidia stock ownership by 13F filers (from 64.0% to 54.9%). The number of new positions taken by 13F filers over the period decreased from 492 to 423.

A slight decrease of 0.84% was observed in the number of 13F filers who increased their positions in NVDA stock, while there was a rise of 30.48% in the number of 13F filers who reduced their positions.

Institutional Ownership: Looking at overall institutional ownership of NVDA stock, data on active positions indicates a total of 1697 holders increased position in the stock, while 1699 holders decreased ownership.

Also, from among the top institutional holders of NVDA stock, the top 5 holders have decreased their ownership as of the last reported quarter.

Institutional Holder	Date	Shares Held	Change (Shares)	Change (%)	Value (in 1,000s)
Vanguard Group Inc	06/30/2023	201,392,728	-4,266,576	-2.08%	$87,617,920
Blackrock Inc	06/30/2023	182,096,923	-1,592,878	-0.87%	$79,223,087
FMR LLC	06/30/2023	131,491,181	-4,926,131	-3.61%	$57,206,553
State Street Corp	06/30/2023	91,510,810	-30,473	-0.03%	$39,812,693
Price T Rowe Associates Inc	06/30/2023	54,723,581	-1,740,254	-3.08%	$23,808,041
Geode Capital Management, LLC	06/30/2023	47,459,414	1,403,401	3.05%	$20,647,693
JPMorgan Chase & Co	06/30/2023	35,567,980	5,483,030	18.23%	$15,474,205
Morgan Stanley	06/30/2023	33,261,283	6,189,768	22.87%	$14,470,654
Norges Bank	12/31/2022	26,692,722	2,265,962	9.28%	$11,612,936
Northern Trust Corp	06/30/2023	25,401,425	-1,307,300	-4.90%	$11,051,144

Taking Profits Off The Table?

The next few quarters data will confirm whether this NVDA stock shedding is triggered by:

• An opportunity to take profits off the table with the stock clocking new highs this year.
• An expectation for a downtrend from here, assuming the stock has peaked, or
• Warnings bells that the Street isn’t taking into account yet.

Read Next: Will Nvidia’s $400 Support Level Ignite A New Era Of Momentum After The China Export Ban?

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