Peter Thiel just made one of the boldest moves in the investing world this year, and it’s turning heads across Wall Street. The billionaire tech entrepreneur completely dumped his stake in Nvidia during the third quarter, walking away from nearly $94 million worth of shares right when most investors are still bullish on the AI chipmaker.
This wasn’t a subtle rebalancing act. Thiel’s hedge fund, Thiel Macro LLC, eliminated all 537,742 shares of Nvidia, which had represented roughly 40% of the fund’s entire portfolio. Even more striking, his total equity holdings shrank from $212 million in the second quarter to just $74.4 million by the end of September.
That’s a two-thirds reduction in a single quarter, making it one of the sharpest portfolio pivots by any major tech investor this year.
Thiel’s Alarming Nvidia Exit: Is the AI Hype Cycle Running Too Hot?
The timing of Thiel’s exit couldn’t be more eyebrow-raising. Nvidia just sailed past a $5 trillion valuation, with quarterly sales jumping from $39.3 billion to $46.7 billion. Data center revenues alone surged 56%, and analysts are projecting the company could hit $1 trillion in annual sales by 2030. By any measure, Nvidia looks like it’s firing on all cylinders.
Yet Thiel, who co-founded PayPal and became Facebook’s first outside investor, decided this was the moment to bail completely. He’s not just any tech tourist, either. As chairman of defense AI powerhouse Palantir and founder of the influential Founders Fund that backed SpaceX and Airbnb, Thiel has a proven track record of spotting transformative technology trends early.
Thiel has been sounding alarm bells about artificial intelligence for a while now, and his portfolio moves align perfectly with those warnings. He’s compared the current AI excitement to 1999, when investors anticipated technological transformations that ultimately took 15 to 20 years to actually materialize.
His concern isn’t that AI won’t be transformative, but that the hype cycle is running far ahead of the actual economics.
Back in July, Thiel pointed out something he called “very strange” about the AI landscape: Nvidia was capturing 80 to 85% of all profits in the sector.
While the chipmaker prints money, many other players in the AI ecosystem are still losing cash. That kind of profit concentration, he suggested, might not be sustainable.
Thiel’s move mirrors another high-profile exit. Japanese tech giant SoftBank announced it sold its entire $5.8 billion stake in Nvidia in October, though SoftBank’s CFO insisted the decision had “nothing to do with Nvidia itself.” Meanwhile, hedge fund manager Michael Burry, known for predicting the 2008 financial crisis, has taken bearish positions against both Nvidia and Palantir.
Peter Thiel Sells Tesla and Nvidia Bets, Consolidates Portfolio Around Apple and Microsoft
A deeper look at recent 13F filings from 909 hedge funds shows investor sentiment on Nvidia is pretty much split down the middle. Around 161 funds increased their positions in the chipmaker during the third quarter, while 160 decreased them.
Wall Street analysts remain mostly bullish, with the average price target suggesting about 23% upside, but cracks in the consensus are starting to show.
Rather than staying in the red-hot AI chip sector, Thiel is consolidating around established tech giants. He significantly boosted his holdings in both Apple and Microsoft, adding 79,181 Apple shares and 49,000 Microsoft shares. These moves suggest he believes diversified technology platforms with proven business models represent safer long-term bets than companies whose valuations depend primarily on AI expectations.
Tesla remains Thiel’s largest holding, though he cut that position by more than 76% during the quarter. The electric vehicle maker still accounts for roughly 39% of his portfolio at $28.91 million. He also completely exited his position in Vistra Energy, which had represented another 19% of his holdings.
Thiel Sells Off Amid Valuation Doubts and ‘Circular Deals’
Thiel’s dramatic portfolio shift raises important questions about whether AI investments have gotten ahead of themselves. Circular deals between chipmakers, startups, data center operators, and other tech players have fueled concerns that the industry might be propping itself up artificially.
The fundamental tension is clear: AI companies continue raising and spending money at breakneck speeds, but many haven’t demonstrated monetization models that would justify their sky-high valuations. Thiel seems to be betting that reality will eventually catch up with expectations, and when it does, being concentrated in companies dependent on AI hype might not look so smart.
Whether Thiel’s caution proves prescient or premature remains to be seen. Nvidia reports earnings this week, and the results could either validate concerns about an overheated market or prove the skeptics wrong. For now, though, one of Silicon Valley’s most successful investors has made his position crystal clear: he’s sitting this one out.
