Tiger 21, a network of ultra-high-net-worth investors and entrepreneurs, recently released a report on its asset allocation for the second quarter. Surprisingly, more than half of the members, specifically 57%, have decided not to invest in chip giant Nvidia. Interestingly, the majority of these members have no plans to initiate a position in the company, citing concerns about the sustainability of Nvidia’s growth and the potential threat of competitors catching up in the market.
According to Michael Sonnenfeldt, the chairman of Tiger 21, the collective personal assets of the club’s members amount to over $165 billion. Founded in 1999 by Sonnenfeldt, the group aims to provide advice and insights on wealth preservation, investments, and philanthropy. With 123 groups in 53 markets and over 1,450 members, Tiger 21 serves as a platform for the wealthy elite to engage with one another on financial matters.
Out of the 43% of club members who have chosen to invest in Nvidia, most are hesitant to increase their stake in the company. The prevailing sentiment among this group is the belief that Nvidia’s stock has already reached high valuations, causing skepticism about its future growth potential. Recent events have seemingly justified these concerns, with Nvidia’s shares plummeting by 9.5% in a single night, resulting in a market cap loss of approximately $300 billion amid broader market turbulence in the U.S.
Despite Nvidia’s current status as a leader in AI technology, a sizeable portion of Tiger 21 members, around 43%, anticipate that the company may not be able to maintain its success over the next decade. Some investors have opted to exclude technology companies like Nvidia from their portfolio altogether, opting instead for investments in real estate or other sectors. The rapid pace of technological advancements, as evidenced by Tesla and the electric vehicle market, has led some members to question Nvidia’s long-term viability in the face of increasing competition.
Michael Sonnenfeldt emphasized that Tiger 21 members prioritize wealth preservation over chasing extravagant returns. The club’s cautious approach towards investments can be attributed to concerns about the volatility and risks associated with technology stocks like Nvidia, despite their impressive growth potential. While Nvidia has been lauded as ‘the world’s most important stock’ and experienced significant market cap growth driven by the AI boom, recent fluctuations in its stock price have raised doubts among investors.
Despite the reservations surrounding Nvidia, Sonnenfeldt remains optimistic about the broader AI industry. He views AI as one of the most compelling investment themes in financial history, highlighting the disruptive potential of artificial intelligence technologies. Real estate constitutes a significant portion, 26%, of Tiger 21 members’ portfolios, even in the face of rising interest rates, while public equities make up 22% of their asset allocation.
The affluent members of Tiger 21 exhibit a prudent approach towards their investment decisions, with a notable aversion towards Nvidia stock. While the company’s current market position is strong, uncertainties about future growth prospects and increasing competition have led many investors to exercise caution and diversify their portfolios across different asset classes.