Peter Thiel Offloads Nvidia Stake as Fears of AI Market Bubble Intensify

Billionaire technology investor Peter Thiel has divested his entire position in Nvidia, a move reflecting growing concerns about the sustainability of the artificial intelligence investment surge. Thiel Macro, his hedge fund, sold its substantial 100 million US dollar stake in the chip manufacturer during the three months leading to September, as revealed by recent financial filings in the United States.

The decision by Thiel follows closely on the heels of a similar exit by SoftBank, the influential Japanese investment firm, which disposed of its own Nvidia shares, previously valued at 5.8 billion US dollars. These sales come at a pivotal moment for Nvidia, renowned for its critical role in supplying chips that underpin the latest advancements in AI technology, including the training and operation of prominent systems such as ChatGPT.

Recently, Nvidia achieved a landmark valuation of 5 trillion US dollars, making it the first company of its kind to reach this milestone. However, its shares have since suffered a downturn, dropping by over 12 percent from recent highs as investor sentiment wavers. On Monday, Nvidia’s share price fell by more than 2 percent with trading open on Wall Street, underscoring doubts about whether the AI-driven market momentum can be sustained.

The company is set to reveal its third quarter results on Wednesday, a key moment for market watchers concerned that the high expectations for artificial intelligence may have outpaced reality. Thiel Macro, which now counts Microsoft, Apple and Tesla among its investments, has also reduced its holding in Tesla, aligning with a more cautious approach in the current market climate.

Thiel, noted for founding PayPal and Palantir, and for early stage investments in companies like Facebook, commented at a recent conference that the current AI boom resembles the internet bubble of 1999, suggesting a period of overvaluation with uncertain long term returns. He observed that while Nvidia was a sound investment in prior years, the surge in profitability has become too conspicuous to present the highest returns going forward.

Investor shifts in the broader technology sector have also been pronounced. Alphabet, the parent of Google, saw its shares climb by over five percent upon news that Berkshire Hathaway, led by Warren Buffett, had acquired a 4.3 billion US dollar holding. Alphabet shares have risen by more than 50 percent this year, allaying concerns that AI chatbots such as ChatGPT might threaten the relevance of the company’s search business.

Market leadership in technology remains in flux as stakeholders reassess the long term potential and risks surrounding artificial intelligence. Thiel’s latest move signals heightened caution among veteran investors, adding weight to speculation that the AI sector could be entering a more volatile phase.