Scottish Mortgage Investment Trust PLC (LSE:SMT), the FTSE 100 favourite for US big tech exposure, has made the risky decision to trim its stake in Wall Street’s premier artificial intelligence play Nvidia Corp.
SMT cited the prohibitive costs associated with AI adoption as the core justification for trimming its stake.
Nvidia’s cutting-edge microchip chips have become the de facto computing hardware for training large-language models, including OpenAI’s groundbreaking ChatGPT LLM.
This has led Nvidia to evolve from niche gaming company to, at the time of writing, the most valuable company on the planet.
“Companies must find ways to offer competitively priced AI systems while managing the skyrocketing costs of training them,” said SMT. “This raises concerns about the sustainability of current capital equipment spending, including Nvidia chips.”
SMT did not disclose how many Nvidia shares it sold. As of 30 September, Nvidia comprised 4.1% of SMT’s portfolio.
Other prominent tech investments in SMT’s portfolio include Amazon, Tesla, Meta and TSMC.
The trust also has substantial investments in unlisted companies, including Elon Musk’s SpaceX, which comprised 4.6% of the portfolio as of 30 September.
SMT is not the only high-profile fund to trim its Nvidia stake.
Cathie Wood’s Ark Invest firm infamously pared down its Nvidia stake in September 2023. Since then, the stock has tripled in value.
SMT shares dipped 0.4% to 907p on Friday.