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More than half of Tiger 21 members do not invest in Nvidia, according to a recently released asset allocation report from this network of ultra-high-net-worth investors and entrepreneurs.
The network's second-quarter asset allocation report shows that 57 percent of its members have not invested in chip darling Nvidia. A majority of the members who have stayed away from the stock said they do not intend to build a position in the company.
“While Nvidia is the undisputed leader in artificial intelligence right now, a company's growth doesn't last forever and competitors often follow suit, leading to a rebalancing of the market,” said Michael Sonnenfeldt, chairman of the club of the super-rich. The personal assets of its members total more than $165 billion, according to Sonnenfeldt.
Members of the group, founded by Sonnenfeldt in 1999, share advice on wealth preservation, investments and philanthropic efforts.
Tiger 21 has 123 groups in 53 markets. The network has over 1,450 members.
Of the 43 percent of members who have invested in Nvidia, most do not intend to buy more shares because they fear the price has already risen too high.
These fears appear to be justified, as in the wake of a general sell-off on the US markets, Nvidia's share price fell by 9.5 percent overnight and the company's market capitalization lost around $280 billion.
A proud 43 percent of club members surveyed also assume that Nvidia's success will not continue into the next decade.
Some members have decided to avoid the technology sector altogether, which is why Nvidia is not in their portfolio, and would instead prefer real estate or other sectors, Sonnenfeldt said.
“For others, it's because of the nature of investing in technology companies today. Tiger 21 members saw Tesla's rise and today almost all major automakers offer electric vehicles. Although Nvidia is the leader today, some Tiger 21 members believe it's only a matter of time before the competition catches up,” he said.
Sonnenfeldt also said that club members were more concerned with preserving their wealth than chasing high returns.
“You might avoid Nvidia because of its volatility and the risks associated with technology investments, despite its impressive growth,” he said.
Dubbed the “world’s most important stock,” Nvidia rode the wave of the artificial intelligence boom, reaching a market capitalization of $3 trillion earlier this year, with its value increasing nearly ninefold since the end of 2022.
However, the company's meteoric rise has stalled somewhat this summer.
Nvidia led semiconductor stocks lower on Tuesday amid a sell-off on Wall Street, and the stock extended its slide, falling 2% in extended trading.
However, Sonnenfeldt is optimistic about the AI industry as a whole. “The potential of AI seems to be one of the – if not the – most investment-worthy topic in the entire history of finance,” said Sonnenfeldt.
According to Tiger 21's latest allocation report, the majority of its members' allocation is in private equity, 28 percent. Real estate, despite high interest rates, makes up 26 percent of members' portfolios, while listed equities make up 22 percent of their asset allocation.
Correction: This story has been updated to remove an incorrect reference to Nvidia's stock price decline in August.