Altimeter Capital Rebalances Portfolio: Selling Chip Stocks, Investing in C

Published Date : 06/06/2025 

Altimeter Capital, led by Brad Gerstner, has trimmed its stake in Nvidia and exited positions in Micron and Taiwan Semiconductor. Instead, the firm is now focusing on CoreWeave, a rising star in the AI cloud computing sector. 

Brad Gerstner, the founder and CEO of hedge fund Altimeter Capital, has a track record of successful investments. Notable among these are early investments in data cloud company Snowflake and Asian ride-hailing leader Grab. Altimeter has been a significant player in the artificial intelligence (AI) stock market, but recent moves suggest a strategic shift in the firm's portfolio.

According to Altimeter's most recent 13F filing, the firm reduced its stake in Nvidia during the first quarter and completely divested from Micron and Taiwan Semiconductor Manufacturing. These moves might seem counterintuitive given the robust demand for high-end graphics processing units (GPUs) and memory storage chips. However, Altimeter's investment in CoreWeave, a recently IPO-ed AI cloud computing company, provides insight into the firm's broader strategy.

CoreWeave, listed on NASDAQ as CRWV, is a cloud computing infrastructure provider that offers access to Nvidia GPUs and other chip integrations. As of June 4, Altimeter's 2,999,536 shares in CoreWeave were valued at approximately $489 million. This significant holding suggests that Gerstner sees potential in CoreWeave's business model, which is less hardware-centric and more focused on cloud-based AI solutions.

Why Sell Nvidia, Micron, and Taiwan Semi Stock Now?

The decision to reduce exposure to Nvidia, Micron, and Taiwan Semi might seem puzzling on the surface, but several factors could explain these moves. Nvidia currently dominates the data center GPU market with an estimated 90% share. However, this leadership comes with risks. Major cloud hyperscalers like Amazon, Alphabet, and Microsoft are developing their own custom AI chips, which could erode Nvidia's market share over time. Additionally, Advanced Micro Devices (AMD) has been making inroads in the data center market, partnering with companies like Oracle, Microsoft, and Meta Platforms.

Nvidia's exposure to the Chinese market is another concern. U.S. export controls and trade tensions could impact its sales in this crucial region. Micron, specialized in memory storage chips, faces challenges due to the commoditized nature of its products and the shift toward cloud-based AI infrastructure. Taiwan Semiconductor, a leading chip foundry, could see a slowdown if key customers like Nvidia and AMD start using alternative foundry providers, such as Intel, due to geopolitical pressures in Taiwan.

What Does CoreWeave Do?

CoreWeave's business model is distinct from traditional chip manufacturers. The company provides cloud computing infrastructure, offering access to Nvidia GPUs and other chip integrations. This model allows CoreWeave to capitalize on the booming AI market without the complexities of hardware design and manufacturing. CoreWeave's services are particularly valuable for AI training and inference, filling a critical gap between chip production and optimized AI cloud infrastructure.

Is CoreWeave Stock a Good Buy Now?

CoreWeave's stock has experienced significant valuation expansion since its IPO earlier this year. The company's price-to-sales (P/S) ratio has climbed, indicating strong investor interest. However, this momentum could also mean the stock is overbought. CoreWeave's P/S multiple is notably higher than that of mature, profitable companies like Oracle, which also provides core data center infrastructure services.

While CoreWeave's value proposition in the AI landscape is compelling, the current valuation suggests caution. Investing in CoreWeave at this level could leave investors as bag holders. It might be wise to wait for a more favorable entry point or to monitor the company's growth prospects closely.

Should You Invest $1,000 in CoreWeave Right Now?

Before making an investment in CoreWeave, consider the broader market dynamics and the company's growth trajectory. While CoreWeave's potential is evident, the current valuation might not justify the risk. It's advisable to conduct thorough research and possibly look at other opportunities in the tech and AI sectors.

In summary, Altimeter Capital's strategic moves reflect a nuanced approach to the AI market. By reducing exposure to established chip stocks and investing in emerging players like CoreWeave, Gerstner is positioning the firm to capitalize on the evolving landscape of AI and cloud computing. 

Frequently Asked Questions (FAQS): 

Q: What is Altimeter Capital's recent investment strategy?

A: Altimeter Capital has reduced its stake in Nvidia and exited positions in Micron and Taiwan Semiconductor, while investing in CoreWeave, an AI cloud computing company.

Q: Why did Altimeter Capital reduce its exposure to Nvidia?

A: Nvidia faces risks from cloud hyperscalers developing their own AI chips and potential geopolitical issues with China, which may impact its market dominance and sales.

Q: What is CoreWeave's business model?

A: CoreWeave provides cloud computing infrastructure, offering access to Nvidia GPUs and other chip integrations, focusing on AI training and inference services.

Q: Is CoreWeave stock overvalued?

A: CoreWeave's stock has experienced significant valuation expansion, and its price-to-sales ratio is high compared to mature companies like Oracle. Investors should be cautious and consider the current valuation.

Q: What should investors consider before buying CoreWeave stock?

A: Investors should consider the company's growth prospects, the current valuation, and the broader market dynamics in the AI and cloud computing sectors. 

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