In a move that sent ripples through the investment community, Ray Dalio’s Bridgewater Associates slashed its Nvidia holdings by a staggering 65.3% during Q3 2025, according to recent 13F filings.
The hedge fund reduced its stake to approximately 2.5 million shares, representing a drop of about 65% from Q2 levels.
This dramatic pivot comes at a time when artificial intelligence remains Wall Street’s dominant narrative, raising crucial questions about the future of mega-cap tech investments.
The Numbers Behind the Exit
Bridgewater reduced Nvidia holdings by 65.3% in Q3 2025, dropping its holdings to 2.51 million shares amid heightened macroeconomic uncertainty. But Nvidia wasn’t alone in facing Bridgewater’s pruning shears.
The fund more than halved its Alphabet position to roughly 2.65 million shares and cut Amazon by about 9.6% to just over 1.1 million shares. Even more telling, the fund slashed its stake in Meta by nearly half, and trimmed Microsoft by 36%.
This wasn’t simply profit-taking on winning positions—it represented a fundamental reassessment of concentration risk in the world’s most popular stocks.
What Bridgewater Bought Instead
While dumping Nvidia, Bridgewater made a calculated bet deeper into the semiconductor supply chain.
The fund opened a new stake in Applied Materials worth roughly $95 million as of Q3. Applied Materials, which manufactures the equipment needed to produce semiconductors, represents a different angle on the AI revolution—one focused on infrastructure rather than the end products.
Applied Materials’ shares have climbed approximately 40% year-to-date in 2025, driven by growing demand for AI and memory chips, yet they trade at significantly lower valuations than Nvidia.
The company’s mid-20s forward price-to-earnings ratio and 6x sales multiple look modest compared to the stretched valuations of AI darlings.
Ray Dalio’s Debt Cycle Warning
The timing of Bridgewater’s rotation aligns perfectly with founder Ray Dalio’s increasingly vocal warnings about macroeconomic instability.
Dalio warned of sovereign debt risks from U.S. public debt, geopolitical tensions, and central bank interventions. His “Big Debt Cycle” framework suggests that unsustainable debt burdens eventually force corrections, even in the most popular assets.
Dalio has spent much of this year warning that the U.S. economy is approaching a danger zone marked by rising debt, political conflict, and elevated recession risk.
In this context, Bridgewater’s moves look less like a bet against AI and more like prudent risk management ahead of potential turbulence.
The Regulatory Headwinds
Beyond macro concerns, regulatory challenges are mounting for AI chip leaders. Amazon and Microsoft have joined efforts to restrict exports of advanced AI chips to China under the GAIN AI Act, a move that could impact Nvidia’s global market share.
These export restrictions don’t just affect Nvidia—they’re reshaping the entire semiconductor competitive landscape.
For Applied Materials, management warned that new U.S. export curbs on China would cut next year’s Chinese equipment spending, yet Bridgewater still initiated a position. This suggests the fund believes Applied Materials’ exposure is more manageable or that its valuation already reflects these headwinds.
A Broader Hedge Fund Trend
Bridgewater isn’t alone in its reassessment. A growing number of major hedge funds are easing off the AI trade and the Magnificent Seven, even as U.S. indices sit near record highs.
The divergence among elite investors is striking: while some like Cathie Wood’s ARK Invest increased holdings in six of the seven big tech names, others like Peter Thiel’s fund completely exited Nvidia.
This split reflects genuine uncertainty about whether AI valuations have run too far, too fast.
Bridgewater’s total disclosed stock portfolio increased from $24.8 billion in Q2 to nearly $25.5 billion in Q3, a relatively modest 3% lift, despite extensive internal reshuffling—revealing that the firm is rotating rather than retreating from equities entirely.
What This Means for Investors
For retail investors watching institutional moves, Bridgewater’s rotation offers several takeaways. First, concentration risk in mega-cap tech stocks deserves serious consideration, even when fundamental stories remain compelling.
Second, the semiconductor supply chain—companies like Applied Materials, Lam Research, and ASML—may offer more attractive risk-reward profiles than the most crowded AI names.
Third, and perhaps most importantly, diversification matters when macro uncertainty rises. Bridgewater raised its allocation to emerging market and international funds, increasing its stake in South Korea’s EWY fund by 25% and adding 34% to its VWO emerging markets ETF.
The Bottom Line
Bridgewater’s 65% reduction in Nvidia isn’t necessarily a bearish call on artificial intelligence or even on Nvidia specifically.
Instead, it appears to be a sophisticated rebalancing act—locking in extraordinary gains, reducing concentration risk, and repositioning for a potential market environment where valuation multiples compress and regulatory headwinds intensify.
As Nvidia continues to dominate AI computing and posts impressive financial results, investors might question Bridgewater’s timing.
But for a fund that manages over $25 billion and operates on Ray Dalio’s principles of risk management and economic cycle awareness, sometimes the smartest trade is stepping back from the crowd—even when the crowd has been right for a very long time.
The great tech rotation is underway, and Bridgewater’s moves suggest that 2025’s second half may reward investors who look beyond the obvious winners toward companies with reasonable valuations, diversified revenue streams, and positions in the AI infrastructure buildout rather than just the spotlight stocks.
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