A divergence is emerging in Nvidia’s market. Institutional holders are trimming their positions — Candriam cut its stake by 7.2%, and Nvidia itself dumped its holdings in ARM and Applied Digital. Meanwhile, Morgan Stanley says it’s time to buy. The stock is down 3% in 2026 despite strong earnings revisions.
The Smart Money Is Selling
Recent 13F filings reveal a pattern: large institutional holders have been reducing their Nvidia positions. Candriam S.C.A. cut its stake by 7.2% in Q3. Other funds have made similar moves.
More notably, Nvidia itself has been reshuffling its investment portfolio. The company dumped its stakes in ARM Holdings and Applied Digital — two companies closely tied to AI infrastructure — while doubling down on a newer, less well-known AI GPU player.
When the company that makes the chips starts selling its stakes in the AI ecosystem, it’s worth paying attention.
The Analysts Say Buy
Morgan Stanley recently reiterated its buy rating on Nvidia, calling the current price an attractive entry point. The bank pointed to strong earnings revisions, continued AI capex spending by hyperscalers, and Nvidia’s dominant market position in data center GPUs.
The bull case is straightforward: AI spending isn’t slowing down. Microsoft, Google, Amazon, and Meta are all increasing their data center capex. SoftBank just tried to borrow $40 billion for OpenAI. The demand for Nvidia’s hardware is real and growing.
So Why Are Holders Selling?
Several possible explanations:
Profit-taking: Nvidia is up 45% over the past year. Some holders may be locking in gains, especially with macro uncertainty rising.
Supply constraints: Memory (HBM) and optical component shortages could limit Nvidia’s ability to ship as many chips as demand requires. If supply can’t meet demand, revenue growth flattens — even if the market wants more.
Valuation stretch: At current prices, Nvidia is pricing in years of continued hypergrowth. Any slowdown — even temporary — could trigger a correction.
Portfolio rotation: With war in Iran, credit stress at BlackRock, and weak US jobs data, some institutions are rotating into defensive positions. Nvidia, despite being a “must own,” is still a growth stock that gets sold in risk-off environments.
The Supply Chain Signal
The most important signal may be the supply constraints. Next-generation AI infrastructure requires not just GPUs but high-bandwidth memory (HBM), advanced optical interconnects, and massive power delivery systems. Each of these is supply-constrained.
Samsung and SK Hynix control the HBM market. Optical component makers can’t scale fast enough. Power infrastructure takes years to build. Nvidia can design the best chips in the world, but if the rest of the supply chain can’t keep up, growth hits a ceiling.
Who’s Right?
Probably both. The analysts are right that AI demand is structural and Nvidia’s position is dominant. The sellers are right that near-term risks are elevated and the stock is priced for perfection.
The resolution depends on macro. If the Iran situation stabilizes, credit markets calm down, and jobs data improves, Nvidia rallies. If any of those get worse, even the best AI stock in the world gets sold.
Watch the next earnings report. That’s where the supply constraint question gets answered with real numbers.
Sources: CNBC, MarketBeat, Motley Fool