Paul Week of Seligman Investments has reduced his holdings in Nvidia, expressing doubts about the future revenue growth of the company.
During a UBS Group event in Singapore, Week noted that his enthusiasm for Nvidia has waned recently, without specifying the extent of his reduction in holdings. He compared Nvidia’s current situation to Cisco Systems during the dot-com bubble, highlighting the potential risks.
Week pointed out that Nvidia is highly dependent on its top ten clients, who account for 60-70% of its revenue, making it riskier than more diversified companies like Microsoft or Alphabet, Google’s parent company.
Although Nvidia’s shares surged last year due to optimism about artificial intelligence, Week and other investors are skeptical about the sustainability of the rally, noting the company’s high valuation.
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Week also mentioned that companies investing in Nvidia’s artificial intelligence systems are experiencing low returns on investment, and large clients like Alphabet, Microsoft, and Meta Platforms are developing their own processors, potentially reducing future dependence on Nvidia.
Despite these concerns, Nvidia remains a leading position in Week’s portfolio, which has outperformed 97% of investment funds over the past three years.
