Hedge funds dump equities at fastest pace in 13 years even as Nvidia reports record results

Hedge funds have been selling equities, including Nvidia, at the fastest rate in 13 years, even as the company posts record operating and financial results. The move has left investors weighing what to do next as Nvidia’s stock has remained rangebound for more than eight months.

Hedge funds step up selling

According to data uncovered by Goldman Sachs, some hedge funds sold stocks last month at the fastest pace in 13 years. Nvidia was among the technology names affected by the selloff.

Fund managers also increased short positions in U.S. exchange-traded funds, a bearish signal that suggests they expect stock prices to fall. Historically, positioning like this has been associated with poor market outcomes.

Why Nvidia’s shares have struggled despite strong results

The article points to a combination of factors weighing on Nvidia’s stock, including the geopolitical backdrop, persistent inflation, and questions about the future adoption of AI. It also notes that even some experienced investors are starting to lose confidence.

Recent performance and company outlook

Despite the stock’s lack of momentum, Nvidia’s fundamentals have continued to improve. For fiscal 2026 fourth quarter (ended Jan. 26), the company reported record revenue of $68 billion, up 73% year over year and 20% sequentially.

Adjusted earnings per share (EPS) rose to $1.62, up 82% year over year. The expansion in profitability was supported by a gross margin of 71.1%.

Shortly after, Nvidia’s GPU Technology Conference (GTC) added to the positive outlook. Executives said the company has “visibility” into a backlog of more than $500 billion for Blackwell and Vera Rubin AI chips through the end of 2026. The update from CEO Jensen Huang suggested Nvidia will generate “at least” $1 trillion from those AI-focused chips through 2027.

Investment and ecosystem expansion

Nvidia is also expanding its footprint across the AI ecosystem through stakes and partnerships. The article cites $2 billion in stakes in neocloud providers CoreWeave and Nebius Group, optics technology companies Lumentum Holdings and Coherent, networking components provider Marvell Technology, and engineering solutions provider Synopsys. It also notes a $5 billion stake in Intel.

What investors can do

The article contrasts hedge fund behavior with long-term investing. It says hedge funds often use aggressive strategies and can have high portfolio turnover, which can lead to inconsistent returns. By comparison, long-term investors are not judged on quarterly performance or pressured to meet short-term benchmarks.

It argues that investors can “sit tight” and ride out uncertainty rather than react to stock-market momentum.

Valuation metrics cited

The article states that Nvidia trades at 36 times earnings, which it describes as expensive at first glance but below its average multiple of 73 over the past three years. It also cites a price/earnings-to-growth (PEG) ratio of 0.54 and forward earnings of 21 times, describing the stock as attractively priced based on those measures.

Impact and conclusion

While hedge funds are selling and increasing bearish ETF shorts, the article emphasizes that Nvidia’s operating and financial performance remains strong. It concludes that the best course for investors is to avoid reacting to daily market moves and to hold, stating that Nvidia is the author’s largest holding at 15% of the portfolio and that no shares are planned to be sold.