So NVIDIA just dropped their latest earnings report, and Wall Street is throwing confetti like it’s New Year’s Eve. The AI chip darling beat expectations with $1.30 per share and $57 billion in revenue, plus they’re guiding strong for Q4. Cue the champagne, right?
Well, not so fast. While everyone’s celebrating, some of the smartest money on the planet is quietly sneaking out the back door. And honestly? They might be onto something.
The Great NVIDIA Exit
Here’s the thing that should make you pause mid-celebration: Peter Thiel’s hedge fund just dumped their entire NVIDIA stake before earnings. You know, the same Peter Thiel who co-founded PayPal and Palantir? Yeah, that guy doesn’t usually make dumb money moves.
But wait, there’s more! SoftBank – those wild risk-takers who’ll throw money at almost anything – sold their entire NVIDIA position in October. And Michael Burry (yes, “The Big Short” Michael Burry) is literally betting against the company with significant short positions.
When the guy who predicted the 2008 housing crisis starts shorting your favorite AI stock, maybe it’s time to pay attention.
The Margin Squeeze Reality Check
Look, NVIDIA isn’t suddenly a terrible company. They’re still printing money and their GPUs are basically the cocaine of the AI world – everyone wants them. But here’s where things get interesting (and not in a good way).
Their gross margins are sliding. From 76.4% in October 2024 down to 73.4% now. That might not sound like much, but in the chip world, that’s like watching your profit party slowly deflate. They’re transitioning from pure chip sales to data center solutions, which sounds fancy but comes with thinner margins and higher costs.
Meanwhile, Big Tech companies are collectively burning through hundreds of billions trying to build their AI empires. Meta just dropped $14 billion twice this year (because apparently once wasn’t enough), and even NVIDIA itself threw $10 billion at Anthropic this week.
The Competition Is Coming for NVIDIA’s Lunch
Here’s the plot twist nobody wants to talk about: NVIDIA’s biggest customers are also becoming their biggest competitors. Google has their TPUs, Apple’s got their custom Silicon, and Meta is cooking up their own MTIA chips. It’s like selling shovels during a gold rush, except the miners are learning to make their own shovels.
Even Google’s CEO basically said “nobody’s immune to a potential bubble burst, including us.” When the search giant is hedging their bets, you know something’s up.
The Bottom Line
NVIDIA’s 33% gain this year looks impressive until you realize the smart money is already moving on. Rising costs, shrinking margins, and growing competition aren’t exactly the ingredients for a continued rocket ship ride.
Sure, NVIDIA will probably remain profitable and relevant. But the days of explosive growth might be numbered. Sometimes the best parties are the ones you leave early – before the music stops and everyone realizes the punch bowl is empty.
The AI revolution isn’t over, but NVIDIA’s monopoly on it might be. And when Peter Thiel, SoftBank, and Michael Burry are all heading for the exits, maybe it’s time to stop dancing and start thinking about your own exit strategy.