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Paul Wick of Seligman Investments has been trimming his holdings of Nvidia<\/a> Corp. in recent weeks after questioning earnings growth prospects at the stock market darling.<\/p>\n \u201cOur enthusiasm has moderated somewhat over the last one to two weeks,\u201d Wick said by video call at a UBS Group<\/a> AG event in Singapore on Friday, without elaborating on how much of the stake has been cut.\u00a0<\/p>\n Wick \u2014 who has invested in the tech sector for about three decades \u2014 drew parallels between Nvidia and Cisco Systems<\/a> Inc.\u2019s boom during the dot-com bubble. Lofty valuations and the lack of recurring revenue \u201cmakes their businesses inherently riskier,\u201d he said.\u00a0<\/p>\n Nvidia gets about 60% to 70% of revenue from its 10 largest customers, which makes it \u201cinherently a much riskier company than Microsoft<\/a> or Google<\/a> who have very low customer concentration and thousands upon thousands of customers,\u201d said Wick, who runs the $13.5 billion Columbia Seligman Technology & Information Fund.\u00a0<\/p>\n The chipmaker briefly became the world\u2019s most valuable company recently after shares more than tripled over the past year on artificial intelligence optimism. Yet\u00a0many<\/a>\u00a0investors are betting the rally will continue, with Wick and Research Affiliates LLC\u2019s Rob Arnott among the few\u00a0detractors<\/a>.\u00a0<\/p>\n Nvidia trades at 43 times projected earnings over the next year, a richer valuation than all but one of its peers in the Philadelphia Semiconductor Index.<\/p>\n Generative AI companies that have spent billions on Nvidia systems have low return on invested capital, Wick said. He added that \u201cmany of Nvidia\u2019s largest customers are aggressively designing their own processors,\u201d including Alphabet Inc.\u2019s Google, Microsoft Corp. and Meta Platforms<\/a> Inc.\u00a0<\/p>\n The stock remains among the top holdings of his fund, which has beaten 97% of its peers over the past three years, according to data compiled by Bloomberg.<\/p>\n Nvidia has to \u201cshow that the growth can continue at a robust clip,\u201d Wick said.<\/p>\n<\/div>\n\nSubscribe to the Fortune Next to Lead newsletter to get weekly strategies on how to make it to the corner office. Sign up for free<\/a> before it launches on June 24, 2024.<\/div>\n<\/div>\n