From firm holding to decisive clearance! Nvidia (NVDA.US) “Iron Powder” Fund Manager Warns of Multiple Risks

Zhitong Finance App learned that hedge fund founder Jonah Cheng called Nvidia (NVDA.US) the most successful investment in his career. But now, he has sold his last batch of Nvidia shares and questioned the future of the $3.5 trillion chip giant. Captain Global Fund, a fund owned by the former UBS Group analyst, focuses on the technology sector and achieved a 42% return last year. The fund is one of many beneficiaries of Nvidia's soaring stock price over the past decade. When Jonah Cheng founded the fund in 2016, Nvidia was one of the first stocks he bought, and since then he has invested more than once.

Jonah Cheng sold all Nvidia shares in the first quarter of this year due to concerns about delays in delivery of its GB200 server rack. He pointed out that problems such as inventory risk, lack of increase in profit expectations, competition brought about by self-developed chips, and the slowdown in cloud computing companies' spending are all reasons he chose to avoid this stock. He said, “I really love Nvidia. This stock has helped me make the most money in my life.” “But when I need to sell, I have to sell. You can't fall in love with a stock.”

Over the past five years, Nvidia's stock price has soared more than 1,400%. Although still widely favored by analysts, some skepticism is now beginning to appear. Seaport Global Securities gave the stock a rare “sell” rating on April 30 on the grounds that the 2026 AI budget may slow down. Michael Burry, famous for “shorting the US real estate market,” also bought a large number of Nvidia's put options earlier this year, although that was probably just a hedging operation.

However, Nvidia is still a difficult stock to short. Although Nvidia fell for a while in the first quarter due to advances in China's DeepSeek artificial intelligence technology, the stock price has now fully rebounded. As of last Friday's close this year, the cumulative increase was about 6%. Signs of easing between China and the US will also help ease a major problem faced by global chipmakers.

Jonah Cheng was a high-profile chip industry analyst at UBS. After turning into a hedge fund manager, he said he hasn't completely turned into a long-term bearish on Nvidia. He said that if the company raised profit expectations, he would still buy back Nvidia shares, adding that he is not shorting the stock so far.

Jonah Cheng also sold his TSM.US (TSM.US) shares at the end of 2024. The reasons why the world's largest foundry chipmaker was sold by him include geopolitical risks and uncertainty about the cloud service provider's future spending plans.

Currently, he is more inclined to invest in small and medium-sized companies that supply components for tech giants. Some of his most optimistic stocks include AI server manufacturer Celestica (CLS.US) and Wiwynn Corp., cooling product manufacturer Asia Vital Components Co. , and cable manufacturer Credo Technology Group Holding Ltd.