Meta, Microsoft Dumped by Blue Whale as Nvidia Becomes Core Bet

In a stark shift reflecting evolving tech sector dynamics, Blue Whale Capital—renowned for its contrarian bets—has dramatically reduced stakes in Meta Platforms (META) and Microsoft (MSFT), while doubling down on NVIDIA (NVDA). The moves, revealed in recent portfolio filings, underscore a strategic pivot toward AI infrastructure leaders and away from legacy software giants.

Meta: A 44.81% Stake Reduction Signals Waning Conviction

Blue Whale’s Q1 2025 filings show a drastic cut in Meta holdings, with shares dropping from 137,129 to 75,677—a reduction of over 44%. The Meta position, once a top holding, now represents just $37.95 million, down from $44.31 million in late 2023. This retreat reflects skepticism about Meta’s ability to navigate macroeconomic headwinds and competition in the AI-driven content creation space.

The fund’s exit aligns with Meta’s struggles: its shares have underperformed, falling 22% year-to-date as investors grow wary of its reliance on advertising revenue and underwhelming AI product launches.

Microsoft: Trimmed to 4.54% of Portfolio Amid AI Capital Shifts

Microsoft’s fate is equally telling. Blue Whale slashed its MSFT stake from 218,000 shares (valued at $92 million) in Q1 2024 to a portfolio weight of just 4.54% by Q3 2024. The fund cited concerns over rising capital intensity and Microsoft’s valuation relative to its AI ambitions.

While Microsoft remains a tech titan, its AI initiatives—such as Azure’s cloud infrastructure—face competition from hyperscalers like Amazon and Alphabet. Blue Whale’s reduction highlights a broader theme: application-layer software faces higher risk compared to hardware enablers of AI.

NVIDIA: The Core Bet—11.18% Portfolio Weight Amid Profit-Taking

NVIDIA, however, is the clear beneficiary of Blue Whale’s reallocation. Despite selling shares to comply with UCITS concentration limits (capping single holdings at 10%), NVIDIA’s portfolio weight remains at 11.18%, its shares valued at $143.59 million. This reflects the fund’s belief in NVIDIA’s dominance in GPU-driven AI infrastructure, a sector growing at breakneck speed.

NVIDIA’s Q1 2025 revenue hit $26.0 billion, a 262% year-over-year surge, driven by data center demand. Its Blackwell platform and partnerships with cloud giants solidify its role as the “indispensable” supplier of AI training tools. Even after profit-taking, Blue Whale’s position in NVIDIA exceeds $100 million in realized gains—a testament to its foresight.

Strategic Rationale: AI Infrastructure Over Applications

Blue Whale’s moves are rooted in a thesis that AI infrastructure (hardware, semiconductors) will outperform application-layer software in the near term. Key points include:
1. NVIDIA’s Ecosystem Moat: Its CUDA software and GPU architecture have no immediate rival, locking in cloud providers and startups.
2. Microsoft’s Capital Allocation Woes: Over $20 billion invested in AI since 2023 has yet to translate to tangible ROI, prompting Blue Whale to trim exposure.
3. Sector Diversification: While reducing Big Tech, Blue Whale expanded into semiconductors (e.g., Applied Materials, Lam Research) and non-tech themes like US sports gaming—positions aligned with AI’s cross-sector impact.

Conclusion: Betting on the “New Oil” of AI

Blue Whale’s portfolio adjustments are a masterclass in thematic investing. By exiting Meta and Microsoft, it avoids stocks burdened by valuation risks and slower AI monetization. NVIDIA’s near-10% portfolio cap constraint—paired with realized profits—shows discipline in managing exposure to a red-hot stock.

The data speaks clearly: NVIDIA’s 427% year-over-year data center revenue growth and Blue Whale’s 11.18% portfolio weight highlight its centrality to the AI revolution. Meanwhile, Microsoft’s 4.54% weighting and Meta’s 44.81% stake reduction reflect a sector reshuffle.

For investors, the lesson is stark: in an AI-driven world, hardware infrastructure is the “new oil,” and those enabling it—like NVIDIA—are the true winners. As Blue Whale’s Q1 2025 filings show, the future belongs to those who build the engines, not just the apps.