Elliott Management, the prominent activist investment firm led by billionaire Paul Singer, has taken a substantial short position against Nvidia, betting that the AI chipmaker’s stock is overvalued and artificial intelligence technology is “overhyped.” According to SEC filings released Friday, Elliott purchased put options on 1.45 million Nvidia shares with a notional value of approximately $195 million as of December 31, 2024.
The $70 billion asset management firm didn’t stop at directly shorting Nvidia. Elliott also acquired puts worth a notional $1.1 billion on the Invesco QQQ ETF (tracking the Nasdaq-100) and $4.2 billion on the SPDR S&P 500 ETF Trust. Since Nvidia is the second-largest constituent of both indexes after Apple, these positions amplify Elliott’s bearish stance on the AI chip giant. Gerry Fowler, head of European equity strategy at UBS, estimates Elliott had “at least $600 million in downside exposure to Nvidia directly or indirectly” by year-end.
This aggressive positioning follows a client letter obtained by The Financial Times where Elliott’s leadership characterized Nvidia and other Big Tech stocks as being in “bubble land.” The firm expressed skepticism about the sustainability of massive demand for Nvidia’s graphics processing units (GPUs) and raised concerns about AI applications’ long-term viability, citing issues with cost efficiency, functionality, energy consumption, and user trust.
Fowler noted that Elliott appears to have “specifically shorted Nvidia via put options” while using broader market hedges to protect long positions in companies like Southwest Airlines and Pinterest. However, he emphasized that without knowing the strike prices and maturities of these options, “the cost of this protection could be quite low or high.”
Interestingly, this marks only the second time Elliott has disclosed a Nvidia position in SEC filings dating back to 2001. The firm briefly owned 5,000 shares worth $4.5 million in March 2024 but sold them within three months. Nvidia’s stock, valued at $3.45 trillion (second only to Apple), has remained relatively flat this year after surging over 100% in the previous 12 months. Elliott Management declined to comment on the filing.
Key Quotes
bubble land
Elliott Management’s leadership used this term in a client letter to describe Nvidia and other Big Tech stocks, signaling their belief that AI-related equities have become dangerously overvalued and disconnected from fundamental business realities.
at least $600 million in downside exposure to Nvidia directly or indirectly
Gerry Fowler, head of European equity strategy at UBS, provided this estimate to Business Insider, highlighting the substantial scale of Elliott’s bearish bet against the AI chipmaker through multiple investment vehicles.
the cost of this protection could be quite low or high — we just don’t know
Fowler emphasized this caveat because SEC filings don’t disclose strike prices and maturities of options, meaning Elliott’s actual risk and potential profit from these positions remains unclear to outside observers.
Our Take
Elliott Management’s aggressive short position represents a watershed moment for AI market sentiment. While retail investors and many institutions remain bullish on AI’s transformative potential, sophisticated hedge funds are increasingly questioning whether current valuations reflect realistic expectations. The firm’s specific concerns about AI applications being perpetually expensive, energy-intensive, or unreliable deserve serious consideration—these aren’t abstract worries but practical challenges already emerging in enterprise AI deployments. What’s particularly striking is Elliott’s willingness to take such a public stance against the market’s most celebrated AI beneficiary. This could embolden other skeptics and accelerate a broader reassessment of AI valuations. However, betting against Nvidia has proven costly for shorts over the past two years, and Elliott’s timing remains uncertain. The real question is whether this represents prescient risk management or premature pessimism about technology that’s still in early adoption phases.
Why This Matters
This development represents a significant contrarian position from one of Wall Street’s most influential activist investors, challenging the prevailing narrative around AI’s transformative potential and Nvidia’s market dominance. Elliott Management’s skepticism matters because it reflects growing concerns among sophisticated investors about AI valuation sustainability, even as the technology continues advancing rapidly.
The timing is particularly noteworthy as AI infrastructure spending has reached unprecedented levels, with companies racing to secure GPU capacity. Elliott’s position suggests that some institutional investors believe the market has priced in overly optimistic assumptions about AI adoption timelines, profitability, and return on investment. Their concerns about AI applications being too costly, energy-intensive, or unreliable echo broader debates about AI’s practical limitations versus its theoretical promise.
For the broader market, this could signal increased volatility in AI-related stocks as investors reassess valuations. If other major institutional investors share Elliott’s skepticism, we could see a correction in the AI sector, impacting not just Nvidia but the entire ecosystem of AI companies, cloud providers, and technology firms betting heavily on artificial intelligence as their growth engine.
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Source: https://www.businessinsider.com/nvidia-elliott-management-stock-short-bubble-ai-paul-singer-2025-2