Blue Whale Growth Fund nets record return riding Nvidia AI surge

Stephen Yiu, the man behind the London-based Blue Whale Growth Fund, has staked his reputation and his fund’s performance on artificial intelligence and, more specifically, a bold bet on Nvidia. Yiu’s early backing has paid extraordinary dividends, turbocharging results that have left competitors trailing in his wake. His conviction in Nvidia dates back to June 2021, when he allocated 10 percent of his fund to the Silicon Valley chipmaker while shares traded at just $18. Now hovering above $200 a share, Nvidia has since become the world’s first $5 trillion company by market capitalisation.

Blue Whale’s concentrated approach sets it apart in an industry that often favours broad diversification and the avoidance of outsized single-stock risks. Over three years, Yiu has diligently trimmed his Nvidia position to respect a 10 percent ceiling while realising more than £100 million from sales. The position remains significant, with close to $200 million of Nvidia shares still in the portfolio. Yiu’s successful high-conviction call on AI stocks has helped power Blue Whale to returns of more than 240 percent since its launch in 2017, compared with the benchmark’s 99 percent, and more than 30 percent in the current year alone. The fund now manages £1.7 billion, a monumental rise from £40 million at inception.

Despite persistent questions over Nvidia’s lofty valuations and the broader risks posed by buoyant AI markets, Yiu remains resolutely optimistic. He likens the current environment to the early stages of the dot-com boom, but asserts that the speed of adoption and the genuine utility of AI separate this cycle from the tech bubble of the late 1990s. Yiu highlights that it took 13 years for 800 million people to access the internet but only three years for the same number to access ChatGPT, a testament to the rapid influence of generative AI.

Yiu advocates for careful AI investing, favouring the ‘AI receivers’—companies profiting from the AI revolution—rather than the big spenders. Nvidia remains at the top, but Broadcom and Lam Research also feature among Blue Whale’s ten largest holdings, alongside less obvious picks such as Uber, Philip Morris, and Flutter. A notable success this year was defence company Leonardo, whose shares have doubled since Yiu’s investment.

Downplaying any emotional attachment to Nvidia or other positions, Yiu insists his loyalty lies with his investors and their returns. He points to a willingness to jettison any stock if the situation shifts. Blue Whale Capital, the management firm Yiu co-founded, reported pre-tax profits of £4.1 million in the last year, underscoring the gains of his strategy. The architect of one of the UK’s best-performing growth funds spends little time on finance stereotypes, preferring a Fiat 500 to flashier modes of transport.

As markets continue to debate the true value of AI stocks, Yiu remains unshaken, betting that technological transformation still has much further to run. His track record thus far makes him a manager worth watching closely in the coming years.