Hedge fund managers are always buying and selling shares of stocks in their portfolios, whether to rebalance them or take advantage of market pricing opportunities. When one dumps billions of dollars worth of one stock, though, investors might want to take notice. If the so-called smart money is moving out, there may be a reason why.

Nvidia (NASDAQ:NVDA) is one such stock billionaire investors fled from in the second quarter. While the artificial intelligence chipmaker still had more buyers than sellers, most of those were smaller trades. The three biggest sales of NVDA stock amounted to almost 96 million shares worth $10.25 billion and the top seller accounted for 60% of it.

GQG Partners is a boutique asset management firm with $66 billion in assets under management. It manages global and emerging market equity portfolios for institutions, advisors, and individuals worldwide. Nvidia was its largest holding by far and it remains so even after shedding 44% of its position in the second quarter. The chipmaker represents 14% of GQG’s portfolio, well ahead of No. 2 Meta Platforms (NASDAQ:META) at 8%.

The sale comes as Nvidia has pared back some of its gains this year and sits 11% below its all-time high. Also, hyperscalers like Meta and Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) — both big Nvidia customers — have hinted they and others may have overspent on AI. Although GQG is upbeat on the long-term prospects for the technology, the hedge fund may believe a lull could be coming in the early investment cycle.

Having dumped $6.2 billion of Nvidia stock in the second quarter, it instead opened entirely new positions in these two stocks.

Key Points About This Article:

• Nvidia (NVDA) has been the go-to name in artificial intelligence, but a pause may be coming in the quarters ahead as businesses assess their AI spending and the returns they’re getting on the investment.
• Hedge fund GQG Partners recently sold off 44% of its NVDA stock valued at $6.2 billion, choosing instead to invest in stocks with more promising upside potential.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Apple (AAPL)

GQG opened a substantial new position in Apple (NASDAQ:AAPL) stock in the second quarter. It purchased 11.3 million shares of the consumer electronics giant at an average buy-in price of $191 per share. That gives the hedge fund’s holdings a value of $2.4 billion representing a 3.6% position in the portfolio.

While Apple has trailed in the AI race to date, it is picking up the pace. The introduction of Apple Intelligence, Apple’s artificial intelligence technology, has Wall Street expecting sales will rise swiftly for the tech star, especially for the latest iPhone 16. Analysts anticipate its new AI capabilities may kick off a new smartphone upgrade cycle.

The iPhone became the top-selling smartphone globally last year, retaking the lead from Samsung. In the U.S., Apple has a 55% share of the market compared to second-place Samsung with 24%.

GQG is already sitting on an 19% gain with the stock and it might not be surprising to see it pick up more shares in the quarters ahead. But with Apple stock up 33% over the last six months, a lot of the anticipated sales and profit growth may be priced in.

Qualcomm (QCOM)

It might seem strange for GQG partners to dump the leading AI chipmaker in favor of another one, but the hedge fund bought $1.6 billion worth of Qualcomm (NASDAQ:QCOM) stock at an average price of $184 per share. The 8.2 million shares acquired gives it a 2.6% position in the portfolio.

While primarily known for its mobile handset chipsets, Qualcomm has transitioned into a significant AI player. Its Snapdragon 8S Gen 3 chip supports on-device generative AI that can run large language models from Meta and Alphabet’s Google.

Flexing its considerable muscle, Qualcomm was also recently in talks with Intel (NASDAQ:INTC) about acquiring its troubled rival. While that would truly create a powerhouse of a company, there may be too many antitrust hurdles for the deal to overcome. Whether or not a deal happens, Qualcomm has plenty of growth ahead on its own. Its deep patent and licensing platform moat for 3G, 4G, and 5G technologies should provide plenty of expansion opportunities beyond what AI brings to the table.

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