A hedge fund of Peter Thiel, the first outside investor in Facebook and leader of the “PayPal Mafia”, has sold off all its holdings in Nvidia Corp., amid rising concerns of an AI bubble.
Thiel Macro LLC offloaded its entire position of 537,742 shares in Nvidia, which would’ve been worth ~$100 million based on the closing price on 30 September. The fund now counts Apple Inc., Microsoft Corp. and a reduced stake in Tesla Inc. as its main bets, according to a 13F filing.
Thiel’s move comes at a time of rising concerns about an AI investment bubble, which turned Nvidia into the world’s most valuable company. The ‘Big Short’ investor Michael Burry, has been perhaps the highest profile critic, disclosing bearish wagers against Nvidia and Palantir Technologies Inc. Japan’s SoftBank Group Corp. also announced it sold off its shares in Nvidia in October for $5.83 billion, largely to help finance other AI investments.
Thiel has been less bullish on AI than SoftBank founder Masayoshi Son, but both men opted to exit their holdings around the time that Nvidia became the first company to breach a $5 trillion valuation.
AI Boom or Bubble?
Opinions remain divided about the prospects for AI companies, which continue to raise and spend at elevated rates but are yet to show how those investments would pay off.
Burry’s Scion Asset Management has bought put options on Nvidia and Palantir, positions that would benefit from declines in the stock prices. Burry, who rose to fame for his 2008 bet against the US housing market, also posted a cryptic message on X: “sometimes, we see bubbles.”
Burry later took issue with the accounting practices of hyperscalers—the AI firms that buy Nvidia chips—including Microsoft Corp. and Alphabet Inc. He pointed out that they have extended depreciation schedules for their investments in recent years, helping cut expenses and boost profits.