Polen Focus Growth Strategy Initiated a Position in NVIDIA (NVDA) in August

Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The equity market continued its strong performance in the third quarter of 2025, driven by enthusiasm for generative AI and strength in the semiconductor sector. In the quarter, the focus shifted to positive economic surprises, fiscal policy optimism, and better-than-expected corporate earnings. In the quarter, the strategy returned 3.34% (gross) and 3.14% (net) compared to 10.51% for the Russell 1000 Growth Index and 8.12% for the S&P 500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Polen Focus Growth Strategy highlighted stocks such as NVIDIA Corporation (NASDAQ:NVDA). NVIDIA Corporation (NASDAQ:NVDA) offers graphics, compute, and networking solutions. The one-month return of NVIDIA Corporation (NASDAQ:NVDA) was 7.69%, and its shares gained 43.10% of their value over the last 52 weeks. On October 13, 2025, NVIDIA Corporation (NASDAQ:NVDA) stock closed at $188.32 per share, with a market capitalization of $4.585 trillion.

Polen Focus Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its third quarter 2025 investor letter:

"In early August we initiated positions in both NVIDIA Corporation (NASDAQ:NVDA) and Broadcom, after having not owned either company over the past 2½ years following the initial wave of enthusiasm around Gen AI. While we have long admired both companies, their highly cyclical business models have made it extremely difficult to forecast future earnings growth with any degree of conviction. Given our approach of seeking durable and persistent earnings growth that compounds over long holding periods, our concern in holding either was that we would be forced to endure a punishing downcycle within our typical holding period – there is very little room that in a concentrated portfolio of 20-30 companies. In fact, pre ChatGPT, NVIDIA had two punishing down cycles over the preceding five years.

That is specifically what has occurred for NVIDIA and Broadcom. While the sheer magnitude of demand for AI chips, servers and networking equipment was something that we clearly underappreciated, new incremental data points over the past few months lead us to conclude the current boom in AI chips and related hardware will likely continue for the foreseeable future giving us greater conviction over the trajectory of future earnings for both NVIDIA and Broadcom.

NVIDIA produces the fastest chips that are able to process compute intensive tasks like Gen AI training models extremely efficiently, are very flexible so can be used for any type of workload, and as a result are the chips in highest demand as the hyperscalers build out their Gen AI infrastructure (NVIDIA currently receiving 90c of every dollar spent on AI accelerated semiconductors). Their business has a very strong competitive moat, which is partly about the speed of their chips, but also the entire ecosystem they have built around them (programing language, training models and associated network effects)…” (Click here to read the full text)

NVIDIA Corporation (NASDAQ:NVDA) is in 5th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 235 hedge fund portfolios held NVIDIA Corporation (NASDAQ:NVDA) at the end of the second quarter, up from 212 in the previous quarter. In the second quarter of fiscal 2026, NVIDIA Corporation (NASDAQ:NVDA) reported $46.7 billion in revenues, exceeding expectations.  While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered NVIDIA Corporation (NASDAQ:NVDA) and shared the list of AI stocks every investor should watch. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.