Wells Fargo announced on June 27 that it has made adjustments to its Signature Picks equity portfolio, reducing its overweight position in Nvidia (NASDAQ: NVDA) from 6.8% to 5%. The bank cited “risk purposes” as the reason for this position cut.
Chris Harvey, Head of Equity Strategy at Wells Fargo, says, “Nvidia is part of the momentum trade, and it is not breaking, so if you are part of a momentum trade, you will bend, but you won’t break.”
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Nvidia stock suffered some volatility in the recent days
This move by Wells Fargo follows Nvidia’s recent recovery after a series of consecutive declines, which caused the company’s valuation to drop from the top spot to third place.
On June 25, NVDA stock surged nearly 7%, allowing the company to reclaim its $3 trillion valuation and alleviating investor concerns about its critical role in the ongoing artificial intelligence (AI) boom.
Despite its recent volatility, Nvidia remains the best-performing stock in the tech-oriented Nasdaq 100 index, boasting a year-to-date increase of over 162%.
Wells Fargo isn’t the only company trimming stakes in NVDA
Seasoned tech investor Paul Wick of Seligman Investments has recently reduced his holdings in Nvidia, expressing doubts about the company’s future earnings growth.
Speaking at a UBS Group event in Singapore, Wick noted that his enthusiasm for Nvidia had moderated over the past one to two weeks. However, he did not specify the extent of his NVDA stake reduction.
Wick, a legendary investor with nearly three decades of experience in technology investment, compared Nvidia’s current situation to Cisco Systems (NASDAQ: CSCO) during the dot-com bubble, highlighting potential risks.
Coupled with the recent high amount of insider sales of this semiconductor stock, this news could be a potential warning to investors about the future performance of NVDA shares.
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