Does billionaire Ken Griffin know something Wall Street doesn't? Citadel CEO sells $993 million worth of Nvidia stock

Nvidia (NASDAQ:NVDA) is the hottest stock on Wall Street. In recent years, it has been making headlines as it has dominated the world Artificial Intelligence (AI) Chip supplier that controls around 90% of the incredibly lucrative market. As the company's profits exploded, so did its stock price. It has risen more than 1,000% since the end of 2022.

The semiconductor giant is popular not only with private investors, but also with funds on Wall Street. Why is Ken Griffin and his team at Citadel selling a large portion of their stake?

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Citadel Securities is a giant hedge fund known on Wall Street as one of the most successful institutional investors anywhere. This year went well for the company. Net trading revenue in the first two quarters of 2024 increased 81% year-over-year, bringing in nearly $5 billion for Citadel.

Part of that $5 billion came from the sale of nearly 9.3 million Nvidia shares – almost 80% of Citadel's stake. At an average price of about $107 per share, the move raised $993 million for the company.

Although Griffin's fund is required to report the details of such trades quarterly to the Securities and Exchange Commission (SEC), there is actually no other information available that could tell us what Griffin is thinking. The sale of 80% of its stake may be a cause for concern, but without further information it is likely that it is simply a matter of repositioning.

I'm sure he decided he was happy with the return on his investment, and with Nvidia trading at or near all-time highs at the time, it was a good time to exit. I wouldn't read into the trade any further.

Incredibly, despite the success that Nvidia has achieved in recent years, it still seems to have a lot of work to do. Companies around Silicon Valley are in a race to keep billions of dollars flowing into Nvidia's coffers. alphabet CEO Sundar Pichai put it best: “For us, the risk of underinvestment is dramatically greater than the risk of overinvestment.” That's why the company is on track to spend $50 billion in capital expenditures this year $31 billion the year before.

With the impending release of Blackwell, the next version of Nvidia's AI-powered super chips, sales are only likely to rise from their current fever pitch. It was reported that Nvidia sold out of Blackwell for a full 12 months after launch. Even though the new chip is coming to market, its current version, Hopper, is still in high demand and is expected to stick around well beyond Blackwell's launch.

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