Hedge Funds Are Doubling Down on Nvidia Stock. Should You?

Nvidia (NVDA) is at the center of the artificial intelligence (AI) revolution, and hedge funds are sitting up and taking notice. Soros Fund Management bought Nvidia for its portfolio by more than 1,600% in the second quarter, while David Tepper's Appaloosa Management increased its holding by nearly five times. The aggressive positioning is a reflection of Nvidia's leadership in AI chips and infrastructure, even as Chinese regulatory risks impact near-term performance.

The buzz is that Nvidia shares have soared more than 26% in the year so far for 2025, significantly surpassing the S&P 500’s (SPY) around 9% increase for the same period. With the world's accelerated adoption of AI, investors are still considering Nvidia the essential hardware pillar of the phenomenon. The question is whether the price of the stock nowadays correctly reflects both the future expansion prospects and the rising challenges for the business.