Billionaires Sell Nvidia Stock and Buy a Robotaxi Stock Up 300% in 3 Years (Hint: Not Tesla)

Despite Nvidia's strong position in the physical AI market and projected 28% annual earnings growth, some hedge funds, including Appaloosa and Schonfeld Strategic Advisors, reduced their NVDA holdings in Q1, while institutional ownership decreased 2%. These same firms, along with Pershing Square Capital, increased or initiated positions in Uber Technologies, citing Uber's leadership in ride-sharing and food delivery, its potential in autonomous ride-sharing, and a discounted valuation of 15 times earnings with a projected 25% annual earnings growth.

Analysis

Recent Q1 institutional activity reveals a notable divergence in sentiment towards Nvidia and Uber, despite Nvidia's strong positioning in the physical AI market. Prominent hedge funds, including Appaloosa which reduced its Nvidia stake by 56% and Schonfeld Strategic Advisors which cut its Nvidia position by 72%, trimmed their Nvidia holdings, contributing to a 2% sequential decline in the number of large institutional investors holding the stock. This occurred even as Nvidia maintains over 90% market share in data center GPUs—a market forecast to grow 28% annually through 2030—and is projected for 28% annual earnings growth itself over the next three years, with its current 46 times earnings valuation described as fair. Potential reasons for this selling activity include profit-taking, concerns over export controls on advanced GPUs to China (though some broader restrictions were revoked), and the competitive implications of cost-efficient AI models like DeepSeek, although the latter could also expand the AI market. Conversely, these same hedge funds, alongside others like Pershing Square Capital which initiated a new largest holding in Uber, significantly increased their stakes in Uber Technologies; Appaloosa upped its Uber stake by 113% and Schonfeld by 7%. Overall, the number of large asset managers holding Uber increased by 8% in Q1. Uber, whose stock has surged 300% in the past three years, commands a 76% share of the U.S. ride-sharing market and 24% of U.S. food delivery, alongside significant international leadership. The investment case for Uber is bolstered by its expansion into new delivery verticals, the Uber One membership program, growing advertising revenue, and its strategic positioning as a key demand aggregator for autonomous ride-sharing services, targeting a U.S. market valued at $1 trillion and supported by partnerships with Alphabet's Waymo and May Mobility. Uber currently trades at 15 times earnings, a notable discount to its one-year average of 40 times, and is forecast for 25% annual earnings growth over the next three years, making its present valuation appear quite reasonable.

Key Decisions for Investors

• Investors in Nvidia should weigh its dominant AI market position and robust growth forecasts against recent institutional selling pressure, evolving export policies, and the potential for increased competition, which collectively could impact its premium valuation of 46 times earnings.
• Given the significant Q1 buying from notable hedge funds, Uber's leadership in core mobility and delivery markets, its clear strategy for integrating autonomous vehicle services, and a comparatively attractive valuation at 15 times earnings with projected 25% annual earnings growth, the stock warrants consideration for portfolios targeting future transportation trends.
• The observed Q1 capital rotation by several large funds from Nvidia to Uber may signal a tactical re-evaluation of growth versus value opportunities in the tech sector, prompting investors to assess how Uber's distinct autonomous vehicle catalysts and current valuation align with their individual risk-reward profiles compared to Nvidia's established AI narrative.