Sopa Images | LightRocket | Getty Images
A recent asset allocation report from Tiger 21, a network of ultra-high net worth investors and entrepreneurs, found that more than half of the network’s members have no investments in Nvidia.
According to the network’s second-quarter asset allocation report, 57% of members have no investments in semiconductor giant Nvidia, and most of those who refrained from investing in the company’s stock said they have no intention of holding the stock.
“While Nvidia is the undisputed leader in AI right now, no company’s growth lasts forever and competitors often catch up, leading to a market realignment,” said Michael Sonnenfeld, chairman of the Ultra-Wealthy Club, whose members have a combined personal fortune of more than $165 billion, according to data provided by Sonnenfeld.
Founded by Sonnenfeld in 1999, the group’s members exchange advice on wealth preservation, investing and philanthropy.
Tiger 21 has 123 groups in 53 markets with more than 1,450 members in its network.
Of the 43% of members who have invested in Nvidia, most are not considering buying any more shares, fearing the stock price is already too high.
Those fears appeared to be founded, as Nvidia’s shares plunged 9.5% overnight amid a broad sell-off in U.S. markets, wiping out about $280 billion in market capitalization.
43% of club members surveyed also don’t expect Nvidia’s success to continue in the next decade.
Some members have chosen to avoid the technology sector altogether, meaning their portfolios don’t include Nvidia, in favor of real estate or other sectors, Sonnenfeldt said.
“For others, it’s the nature of tech investment today. Tiger 21 members have seen the rise of Tesla and now nearly every major automaker offers an EV. So while Nvidia is the leader today, some Tiger 21 members believe it’s just a matter of time before competitors catch up,” he said.
Sonnenfeldt also said club members are focused on preserving their assets rather than chasing high profits.
“Despite the company’s impressive growth, investors may be avoiding Nvidia due to the volatility and risks associated with technology investments,” he said.
Nvidia, dubbed “the world’s most important stock,” rode the artificial intelligence boom to a market capitalization of $3 trillion earlier this year, and has surged almost ninefold since the end of 2022.
But the company’s rapid growth slowed somewhat this summer.
Nvidia led semiconductor stocks lower amid selling pressure on Wall Street on Tuesday, with its shares continuing to fall in after-hours trading, down 2%.
But Sonnenfeldt is optimistic about the AI industry as a whole. “The potential of AI is one of the most investable themes in the history of finance,” he said.
According to Tiger 21’s most recent member asset allocation report, private equity makes up the majority of members’ asset allocations at 28%. Real estate, despite high interest rates, accounts for 26% of members’ portfolios, and public equities make up 22% of the asset allocation.
Correction: This story has been updated to remove an incorrect statement about Nvidia’s stock price dropping in August.
