NVIDIA: The AI Engine Behind Steve Cohen’s Billion-Dollar Bet

NVIDIA Corporation (NASDAQ: NVDA) has emerged as a cornerstone of billionaire Steve Cohen’s investment strategy, cementing its place among Point72 Asset Management’s top large-cap holdings. With a $562.5 million stake as of Q4 2024, NVIDIA is positioned as one of Cohen’s “huge upside potential” picks—a bet rooted in its dominance of the artificial intelligence (AI) revolution. But as macroeconomic headwinds loom, how does NVIDIA navigate the crosscurrents of growth and risk?

Why NVIDIA? The AI Imperative

NVIDIA’s position as the gatekeeper of AI infrastructure is undeniable. Its GPUs, particularly the H100 (“Hopper”) and upcoming Blackwell architectures, are the engines behind everything from generative AI models to autonomous systems. Analysts at UBS recently reaffirmed a “Buy” rating on NVDA, citing its 98% share of data center GPU shipments and pricing power—H100 chips command up to $40,000 each, with gross margins hovering around 70%. This stranglehold on AI hardware has fueled NVIDIA’s stock to 150% year-to-date gains in 2024, tripling its value over the prior year and briefly pushing its market cap to a record $3 trillion in June , a testament to investor faith in its AI future.

Cohen’s Play: Long-Term Growth vs. Near-Term Volatility

Cohen’s bullish stance contrasts with broader market skepticism. While NVIDIA and other AI stocks like Broadcom (AVGO) lost 25% of their value by early 2025 amid macroeconomic uncertainty, Point72’s Q4 2024 filings reveal a contrarian bet: a 74% increase in NVIDIA holdings (adding 1.57 million shares) to capitalize on long-term AI adoption. This aligns with Cohen’s “Magnificent Seven” strategy, which prioritizes tech giants—Amazon, Microsoft, Alphabet, Apple, Meta, Tesla, and NVIDIA—viewed as essential to the AI ecosystem.

Yet Cohen isn’t blind to risks. His warnings about a 1.5% U.S. GDP growth rate in late 2024, driven by tariffs, immigration slowdowns, and federal spending cuts, have prompted Point72 to hedge with SPY put/call options (SPDR S&P 500 ETF Trust). These derivatives, accounting for ~5% of the portfolio, reflect a cautious stance—a balance between AI’s exponential growth and near-term macroeconomic headwinds.

The AI Landscape: NVIDIA’s Defenses and Threats

NVIDIA’s moat isn’t unbreachable. Competitors like AMD and startups like DeepSeek are nibbling at its market share with $300 million in AI chip investments in 2024. Meanwhile, tech giants like Alphabet and Meta are developing in-house AI chips, potentially reducing reliance on NVIDIA. However, Cohen’s team argues that NVIDIA’s CUDA software ecosystem—used by 90% of AI developers—and its Blackwell architecture’s 3x performance improvement over H100 will keep it ahead.

The firm’s $14 billion investment in OpenAI and partnerships with cloud providers like Microsoft Azure (which saw 157% AI revenue growth in Q2 2025) further insulate it from competition. As AI spending surges—projected to hit $360 billion annually by 2030—NVIDIA’s role as the industry’s backbone remains unassailable.

The Macro Crossroads: Can AI Outpace the Economy?

Cohen’s pessimism about GDP growth isn’t unfounded. With the S&P 500 down 8% year-to-date in 2025, investors are questioning whether AI’s growth can offset broader economic malaise. Yet NVIDIA’s five consecutive quarters of beating earnings estimates—including a 37% stock surge in Q2 2024—suggests resilience.

The wildcard? Regulatory scrutiny. The EU’s AI Act and U.S. antitrust probes could constrain NVIDIA’s partnerships, while geopolitical tensions (e.g., China’s AI chip ambitions) add uncertainty. Still, Cohen’s fund has allocated $1.5 billion to its dedicated AI hedge fund, betting that AI’s “durable theme” will outlast short-term volatility.

Conclusion: NVIDIA’s Double-Edged Sword

NVIDIA is a paradox—a stock with 150% upside potential in AI’s golden age and 25% downside risk in a macroeconomic slowdown. Cohen’s strategy hinges on the latter being temporary. With $80 billion in AI data center investments planned by 2025 and a $3 trillion market cap within reach, NVIDIA’s trajectory is tied to its ability to monetize AI’s global expansion.

The numbers speak: NVIDIA’s 98% GPU market share, 300% premium pricing, and CUDA’s developer lock-in form an impenetrable fortress for now. Even with Point72 trimming its SPY exposure to hedge risks, NVIDIA’s weighting as 1.3% of the portfolio underscores its status as a core holding. As Morgan Stanley’s Mike Wilson warns of a “rapid descent” in equities, NVIDIA’s bet on AI’s permanence—backed by Point72’s billions—may just be the safest gamble in a turbulent market.

In Cohen’s own words: “The best gains have been had.” But for NVIDIA, the gains are only just beginning.