Nvidia Corp. (NVDA), the dominant force in the artificial intelligence (AI) industry, has found itself on the outs with a significant portion of the ultra-wealthy Tiger 21 network. According to the network’s second-quarter asset allocation report, a whopping 57% of Tiger 21 members have opted to stay away from Nvidia. This reluctance, as reported by CNBC, stems from a lack of confidence in the company’s long-term growth prospects.
Tiger 21 Chairman Michael Sonnenfeldt explained the sentiment, stating that while Nvidia currently reigns supreme in AI, sustained growth is a difficult feat to achieve. Competitors often catch up, leading to market adjustments. This skepticism comes despite Nvidia’s impressive growth trajectory and its $3 trillion market capitalization earlier this year. Notably, even among Tiger 21 members who have already invested in Nvidia, 43% are hesitant to add to their positions, suggesting a belief that the stock has peaked.
The cautious outlook toward Nvidia follows recent events that have dampened its bullish trajectory. While the company was projected to reach a $10 trillion valuation, a subpoena from the U.S. Department of Justice (DOJ) regarding potential antitrust violations sent ripples through the market. This development, coupled with a cautionary note from CNBC personality Jim Cramer, who advised against panic selling but acknowledged a potential for further decline in Nvidia’s stock price, has contributed to the bearish sentiment.
As of this writing, Nvidia’s stock was trading down 2.42% in after-hours trading, settling at $105.39. This follows a closing price of $108.00. It remains to be seen whether Nvidia can overcome these challenges and maintain its leadership position in the ever-evolving AI landscape. The company’s ability to address the DOJ’s concerns and navigate a competitive market will likely play a significant role in determining its future success.
