Elliott Management Calls NVIDIA Stock Overvalued and AI Overhyped

Elliott Management, a renowned activist hedge fund, has taken a critical stance on NVIDIA, a leading player in the AI and graphics processing unit (GPU) markets. Elliott Management claims NVIDIA stock is overvalued.

Their argument is backed by a growing list of high-profile investors who are equally skeptical about the company's valuation. Elliott Management's concerns are rooted in the notion that AI, while promising, has been oversold to the market.

Elliott Management's criticism of NVIDIA's valuation is not without merit, as the company's stock price has skyrocketed in recent years. This surge in value has led some to question whether NVIDIA's fundamentals can sustain such a high price.

Elliott Management sold its $4.5 million stake in NVIDIA after taking a scathing tone against the company in its investor letter.

The fund claimed NVIDIA was a "bubble" and that the firm, along with its mega cap technology peers, were all in "bubble land."

Elliot Management owned 50,000 NVIDIA shares during the first quarter, which was a small part of its $16 billion total investments.

The fund's decision to divest from NVIDIA comes after a rough hedge fund filings season for mega caps.

Elliot Management's latest SEC filings show that it has sold all of its NVIDIA shares and eliminated the company from its investment portfolio.

The fund hasn't completely given up on technology stocks, however, as it bought a $24.5 million stake in the British chip design house Arm.

Arm's chip designs are used in smartphones, data centers, and other computing chips, and it was the target of a failed acquisition attempt by NVIDIA.

Elliot Management also bought a $89.7 million stake in the storage company Western Digital, although it remained unchanged during the quarter.

The rush in big tech to buy NVIDIA's GPUs has created a shortage of the products, and broader macroeconomic concerns have weakened investor sentiment for the technology industry.

NVIDIA is also allegedly suffering from the delays of its leading edge Blackwell AI GPUs.

Elliot Management believes that most AI use cases are "never going to be cost-efficient, are never going to actually work right, will take up too much energy, or will prove to be untrustworthy."