Nvidia (NVDA): Giverny Capital Asset Management's Cautious Optimism on AI and Comparisons to the Dot-Com Era

Giverny Capital Asset Management, LLC, an investment management company, recently published its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The portfolio generated good results in the third quarter and returned 6.78% compared to 8.12% for the S&P 500. YTD, the fund returned 12.57% compared to 14.83% for the index. Additionally, you can review the fund’s top 5 holdings to see its best picks for 2025.

In its third-quarter 2025 investor letter, Giverny Capital Asset Management highlighted stocks such as NVIDIA Corporation (NASDAQ:NVDA). NVIDIA Corporation (NASDAQ:NVDA) offers graphics, compute, and networking solutions. The one-month return for NVIDIA Corporation (NASDAQ:NVDA) was -6.21%, and its shares gained 32.59% over the last 52 weeks. On December 12, 2025, NVIDIA Corporation (NASDAQ:NVDA) stock closed at $175.02 per share, with a market capitalization of $4.261 trillion.

Giverny Capital Asset Management stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its third quarter 2025 investor letter:

"I will end with a note of caution. While I am excited over TSMC's prospects, I also perceive that enthusiasm over Artificial Intelligence has reached a level of euphoria. In late September, NVIDIA Corporation (NASDAQ:NVDA) announced a deal in which it would invest $100 billion in Open Al, the developer of ChatGPT. Open Al will use that money to buy Nvidia chips to use in new data centers. Nvidia essentially is financing a customer who might not otherwise have the capacity to buy $100 billion of Nvidia chips. Nor does the customer have a proven business model: Open Al is expected to lose $14 billion in 2026. Nvidia has done similar deals with other start-ups, most notably CoreWeave.

Maybe I'm just getting cranky, but these circular arrangements recall for me the dot com boom at the end of the 20th Century, when Lucent and Nortel financed start up customers who were building out communications infrastructure. While that infrastructure became the backbone of the Internet economy, many of the infrastructure pioneers went bankrupt along the way, as did Nortel, Lucent went from reporting a $4.8 billion net profit in 1999 to cutting its workforce by 80% and being acquired cheaply by the French company Alcatel in 2006..." (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, 234 hedge fund portfolios held NVIDIA Corporation (NASDAQ:NVDA) at the end of the second quarter, compared to 235 in the previous quarter. In the third quarter of fiscal 2026, NVIDIA Corporation (NASDAQ:NVDA) reported $57 billion in revenues, marking a 62% year over year growth. 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 in the spotlight for investors. L1 Capital International Fund initiated a position in NVIDIA Corporation (NASDAQ:NVDA) during Q3 2025. 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.