Nvidia (NVDA 0.78%) and Chipotle Mexican Grill (CMG 0.90%) are strong companies. Nvidia plays a key role in the AI industry, while Chipotle has a solid brand in fast-casual dining. Both recently split their stocks due to rising prices.

Notably, several hedge fund managers sold Nvidia shares in Q2 while buying Chipotle:

  • Cliff Asness: sold 1.3M Nvidia, bought 673K Chipotle.
  • Israel Englander: sold 672K Nvidia, bought 3.5M Chipotle.
  • Steven Cohen: sold 409K Nvidia, bought 1.4M Chipotle.
  • Steven Schonfeld: sold 370K Nvidia, bought 131K Chipotle.

These trades don’t suggest Nvidia is a bad investment, as the managers still hold significant Nvidia shares. For instance, it’s AQR’s largest holding.

1. Nvidia

Nvidia is crucial to the AI boom, holding 80% of the AI accelerator market. Its performance and software tools make it a leader. Analyst Vivek Arya from Bank of America predicts Nvidia will maintain a large market share through the decade.

Nvidia’s Q2 results showed a 122% revenue increase to $30 billion, driven by AI hardware demand. Earnings rose 152% to $0.68 per share.

The upcoming launch of the Blackwell GPU, which has a strong order backlog, should drive further growth. Currently, Nvidia’s stock trades at a reasonable valuation with expected earnings growth. Long-term investors might consider buying small amounts.

2. Chipotle Mexican Grill

Chipotle operates over 3,500 restaurants and emphasizes “food with integrity,” sourcing quality ingredients. Its focus on efficiency has improved customer experience.

In Q2, Chipotle’s revenue grew 18% to $3 billion, with earnings up 36% to $0.34 per diluted share. Hedge fund managers took positions in Chipotle during the same period, as its valuation improved.

While Chipotle’s stock remains expensive, potential investors may want to wait for a price drop before buying.