(News.com.au) - If there was any need for evidence of big money in artificial intelligence, then the frenzy around chipmaker Nvidia is it.
On Thursday night (Friday AEST) shares in the tech company surged 24.4 per cent on Wall Street taking its year-to-date gains to 165 per cent. Its market capitalisation has now soared to $US939 billion ($1.4 trillion AU).
The catalyst for the rise was founder and CEO Jensen Huang’s jaw-dropping guidance predicting revenue to hit $US11billion ($16.8bn AU) in the June quarter.
To put that in perspective, that is a 53 per cent growth and more than 50 per cent higher than Wall Street estimates.
The firm is benefitting from a wave of demand for its chipsets that support generative AI technology platforms like OpenAI’s ChatGPT and Alphabet’s Bard.
Nvidia’s boom means Huang’s wealth has dramatically soar too - from $US6.4bn ($9.8bn AU) to $US34bn ($52.1bn AU).
But there are significant losers too from the Nvidia story.
One obvious investor that has clearly missed the boat is tech and innovation specialist Cathie Wood.
Ms Wood’s Ark Invest sold nearly one million shares of Nvidia between early October and today, after Nvidia headed into a 52-week low in mid-October.
On October 5, Ark Invest owned 1.3 million Nvidia shares across all of its next-generation technology ETC.
Today, Ark Invest holds just 390,000 shares across its suite of ETFs.
In February, Wood said Ark’s wave of Nvidia sales was in part because its valuation had become too stretched and that it was consolidating its portfolio into higher conviction names.
“We like Nvidia, we think it’s going to be a good stock. It’s priced, it’s the ‘check-the-box’ AI company. For a flagship fund, where we’re consolidated towards our highest conviction names, part of that has to do with the valuation,” she told CNBC on February 27.
It may turn out to be a big mistake — and a costly one for Cathie Wood.
Rough calculations suggest Ark Invest left more than $200 million in potential profits on the table when it sold down its Nvidia stake throughout the end of last year.
By Carla Mascarenhas
May 26, 2023
