Here’s Why ClearBridge Large Cap Growth Strategy is Trimming Nvidia (NVDA)
ClearBridge Investments, an investment management company, released its “ClearBridge Large Cap Growth Strategy” third quarter 2024 investor letter. A copy of the letter can be downloaded here. In the third quarter, increased volatility was caused by weak employment reports, leading to a brief correction in parts of the U.S. equity market. However, after a 50 basis point interest rate cut by the Federal Reserve, stocks rallied, with the S&P 500 Index rising by 5.89% and the small-cap Russell 2000 Index jumping by 9.27%. Leadership in equities broadened beyond the Magnificent Seven companies. In the quarter, profit-taking among large-cap companies and early signs of a possible market rotation caused growth stocks to underperform value stocks. The benchmark Russell 1000 Growth Index increased by 3.19%, falling behind the Russell 1000 Value Index, which saw a growth of 9.43%. The strategy outperformed in the quarter driven by broader participation among stable and cyclical growth positions in health care, communication services, and industrials. In addition, please check the fund’s top five holdings to know its best picks in 2024.
ClearBridge Large Cap Growth Strategy highlighted stocks like Global Equity Strategy highlighted stocks like NVIDIA Corporation (NASDAQ:NVDA), in the third quarter 2024 investor letter. NVIDIA Corporation (NASDAQ:NVDA) offers graphics and compute and networking solutions. The one-month return of NVIDIA Corporation (NASDAQ:NVDA) was 19.47%, and its shares gained 168.45% of their value over the last 52 weeks. On October 3, 2024, NVIDIA Corporation (NASDAQ:NVDA) stock closed at $122.85 per share with a market capitalization of $3.014 trillion.
ClearBridge Large Cap Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2024 investor letter:
"This focus on consistency also guides our regular trimming of strong performers to manage stock-specific and overall portfolio risk. The quarter saw us continue to trim NVIDIA Corporation (NASDAQ:NVDA), reducing the GPU chipmaker from an active weight in the portfolio to an underweight versus the benchmark. We continue to believe in Nvidia’s 10-year trajectory as hyperscaler and enterprise customers invest in GPU architecture. However, we have reduced our Nvidia position as its valuation now more fully reflects the company’s robust growth path and as estimates have risen to levels that require a very steep growth trajectory to drive further stock appreciation."
A close-up of a colorful high-end graphics card being plugged in to a gaming computer.
NVIDIA Corporation (NASDAQ:NVDA) is in 5th position on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 179 hedge fund portfolios held NVIDIA Corporation (NASDAQ:NVDA) at the end of the second quarter which was 186 in the previous quarter. NVIDIA Corporation (NASDAQ:NVDA) reported another record quarter in Q2 with $30 billion in revenues, representing a 122% year-over-year increase and 15% sequential growth. While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed NVIDIA Corporation (NASDAQ:NVDA) and shared the list of best-performing NASDAQ stocks in 2024. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.