Here's Why NVIDIA Corporation (NVDA) Fell in Q1

Investment advisory firm Ithaka Group released the “Ithaka US Growth Strategy” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. Following two years of gains exceeding 25%, the markets welcomed the new year with considerable volatility and a sharp decline. In the first quarter, Ithaka’s portfolio underperformed the R1000G by 30 basis points, recording -10.3% to -10.0% (gross of fees) amid a negative market environment. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Ithaka US Growth Strategy highlighted stocks such as NVIDIA Corporation (NASDAQ: NVDA). NVIDIA Corporation (NASDAQ:NVDA) offers graphics and compute, and networking solutions. The one-month return of NVIDIA Corporation (NASDAQ:NVDA) was -1.29%, and its shares gained 25.84% of their value over the last 52 weeks. On April 28, 2025, NVIDIA Corporation (NASDAQ:NVDA) stock closed at $108.73 per share with a market capitalization of $2.653 trillion.

Ithaka US Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2025 investor letter:

"NVIDIA Corporation (NASDAQ:NVDA) is the undisputed leader in accelerated computing, with dominant market share in Graphics Processing Units (GPUs) powering AI workloads across data centers, edge devices, and emerging platforms. Its end-to-end ecosystem—from silicon to software (CUDA, networking, and AI frameworks)—creates high switching costs and a widening competitive moat. With secular demand for AI infrastructure still in its early innings, Nvidia stands to benefit from sustained topline growth and strong operating leverage. In early January, a little known Chinese AI company, DeepSeek, released its large language model (LLM), DeepSeek-R1, to an unexpecting world. This model was purportedly trained on very few high-end Nvidia chips and was highly efficient when compared to other leading models. This release set off a chain reaction where investors have had to grapple with the idea that the world may not need as many GPUs as previously thought, which hampered the Nvidia buy case and sent the P/E multiple down to its cheapest level in the past 5 years."

NVIDIA Corporation (NASDAQ:NVDA) is in 5th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 223 hedge fund portfolios held NVIDIA Corporation (NASDAQ:NVDA) at the end of the fourth quarter which was 193 in the previous quarter. NVIDIA Corporation (NASDAQ:NVDA) reported another record quarter in fiscal Q4 2025 with $39.3 billion in revenues, representing a 78% year-over-year increase and 12% sequential growth. While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we covered NVIDIA Corporation (NASDAQ:NVDA) and shared billionaire Israel Englander’s stock picks with huge upside potential. In addition, please check out our hedge fund investor letters Q1 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.