This billionaire just dumped Nvidia stock. Should you follow suit?

Nvidia (NVDA -9.53%) has been the source of incredible gains in both 2023 and 2024. However, some savvy investors are starting to sell, just in case Nvidia can’t live up to the lofty expectations embedded in the stock. Those investors include several billionaire hedge fund managers, such as David Tepper, who runs Appaloosa Management.

Time to follow suit? Or are there more advantages for Nvidia?

Billionaires are starting to reap profits

If a portfolio of a hedge fund or public company has holdings of more than $100 million, the entity must report those holdings quarterly to the SEC, which then makes that information publicly available 45 days after the end of the quarter. So this information is not always current. David Tepper and Appaloosa could have sold some of their Nvidia stock as early as April 1st, even though we didn’t find out about it until August 15th.

But the report gives investors insight into what Wall Street’s big money is up to. In Q2, Appaloosa cut its holdings in Nvidia by nearly 85%. Nvidia now represents just 1.4% of the total investment portfolio. The Appaloosa is not alone either. Billionaire Ken Griffin, head of Citadel Advisors, sold about 80% of his Nvidia shares in Q2.

While these sales may concern some investors, they shouldn’t. Managing a hedge fund is not like having an individual portfolio. Managers have to answer to their customers every quarter, so when they have the chance to make huge gains, they take it. Individual investors don’t have to play the quarterly game, so keeping up with the ups and downs isn’t as much of an issue.

So is now the right time for individual investors to sell?

Nvidia is still growing at unreal speeds

Nvidia recently announced its results for the second quarter of 2025 (ended July 28), and again, they were incredible. Revenue rose 122% year over year to $30 billion, with the data center business continuing to lead. This segment totaled more than $26 billion in quarterly revenue, up 16% from the previous quarter and up 154% from the previous year. Forecasts for Q3 were also strong, with revenue estimated at around $32.5 billion.

So the core business is still growing at breakneck speeds and succeeding, but can it live up to valuation expectations? Current estimates are for Nvidia to generate about $2.75 in earnings per share for fiscal 2025. That means the stock is trading for about 44 times full-year estimates. It’s expensive, and year-over-year growth will slow as Nvidia starts to face tougher comparisons.

With analysts expecting earnings of $3.81 for fiscal 2026, the stock is valued at 32 times next year’s earnings. This is by no means cheap and shows the high expectations from the stock. While Nvidia could hit those projections, the valuation could fall as investors start to worry that Nvidia will fall short. Furthermore, if Nvidia’s growth slows, those valuations will become way too high and the stock will sell off.

So there’s a lot more risk than reward in Nvidia stock right now, and the billionaires have recognized this and reduced their exposure substantially. I don’t think this is a bad move and it’s one that individual investors should start considering. Lots of other fantastic investments are much more reasonably priced.