Top Reasons for Columbia Seligman Global Technology Fund’s Continued Caution Towards NVIDIA Corporation’s (NVDA) High Customer Concentration

Columbia Threadneedle Investments recently released its quarterly investor letter for the Columbia Seligman Global Technology Fund, highlighting the fund’s performance and top holdings. The equity markets saw a rise in the third quarter, with the Russell 1000 Index posting a 6.08% gain, bringing its year-to-date return to 21.18%. The fund’s Institutional Class shares returned 1.00% in the quarter, compared to a 1.52% return for the MSCI World Information Technology Index-Net. NVIDIA Corporation was one of the stocks highlighted in the letter, offering graphics, compute, and networking solutions. Despite a slight decline in the one-month return, NVIDIA’s shares have gained 186.32% over the last 52 weeks. The fund held an underweight position in NVIDIA relative to the S&P North American Technology Sector, citing concerns about customer concentration and potential slowdown in AI buildout. NVIDIA reported another record quarter with $35.1 billion in revenues, showing a 94% year-over-year increase. While NVIDIA remains a promising investment, the fund believes that AI stocks hold greater potential for delivering higher returns within a shorter timeframe. The fund suggested looking for AI stocks that trade at less than 5 times their earnings for promising investments. NVIDIA Corporation was ranked 5th on the list of 31 Most Popular Stocks Among Hedge Funds, with 193 hedge fund portfolios holding the stock at the end of the third quarter.

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