As Nvidia’s shares soar, portfolio managers face the growing risk of overconcentration
Portfolio managers are riding high on Nvidia's meteoric rise, with shares soaring over 785% since 2023. Fueled by AI chip demand, Nvidia briefly claimed the top spot as the world's most valuable company. However, as managers double down on Nvidia, holding positions exceeding 5% of assets, they face heightened risks in a potential market downturn. This concentrated bet reflects a broader trend of investors backing few, high-growth stocks, posing substantial market risks amidst Nvidia's staggering performance.
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By David Randall
Outsized positions in artificial intelligence darling Nvidia NVDA.O have boosted portfolio managers' returns this year but the bets stand to magnify risk if the chipmaker's red-hot shares see a reversal of fortune. Â
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