Economy

Hedge fund titan bets on Nvidia as AI investments reshape the market

Wednesday 10 December 2025 - 17:20

By: Dakir Madiha

Hedge fund titan bets on Nvidia as AI investments reshape the market

Billionaire hedge fund manager Chris Rokos has undertaken a major shift in his artificial intelligence investment strategy, signaling a decisive move toward chip manufacturing and away from software. Recent regulatory filings reveal that Rokos Capital dramatically increased its holdings in Nvidia while fully divesting from Palantir Technologies, underscoring a preference for hardware-driven AI growth.

During the third quarter, Rokos Capital purchased roughly 3.51 million shares of Nvidia, now valued near 650 million dollars. The move represents a more than 200 percent increase in the fund's stake, positioning the firm to benefit from Nvidia’s continuing dominance in data center processing, graphics chips, and AI infrastructure. At the same time, Rokos Capital sold all 159,218 of its Palantir shares, exiting the software analytics sector entirely.

Betting on chips over software

Rokos’s reallocation highlights growing investor confidence in the generative AI hardware boom that continues to drive profits across the semiconductor industry. The timing appears strategic: President Donald Trump announced that the United States would allow Nvidia to export its advanced H200 processors to China under a 25 percent tariff, a policy shift that could open billions in potential new revenue for the company.

Rokos Capital, managing over 22 billion dollars in assets, has achieved returns of about 21 percent through October 2025, sharply outperforming industry averages. Analysts view the firm’s repositioning as part of a broader Wall Street skepticism toward software-driven AI platforms, where valuations have climbed faster than earnings growth.

Valuation concerns mount

Palantir currently trades at roughly 160 times sales, the highest valuation among S&P 500 companies. Analysts have cautioned that such pricing leaves little margin for missteps, particularly if investor enthusiasm cools or growth moderates. The stock has fallen around 20 percent from its November high of 207.52 dollars, though it remains up about 140 percent for the year.

In contrast, Nvidia’s forward price-to-earnings ratio sits near 23 significantly lower than its five-year average of 38 despite the company’s stunning performance. Market watchers suggest that extended export access to China could contribute additional upside, though geopolitical tensions and supply chain constraints continue to temper long-term forecasts.