Nvidia (NVDA +4.14%) and Chipotle Mexican Grill (CMG +0.52%) are leading companies in their fields. Nvidia is key in the AI market, while Chipotle has established a strong brand in the restaurant industry. Both companies had stock splits in June to adjust their high share prices.

Despite their success, some hedge fund managers sold Nvidia shares in the second quarter but bought Chipotle shares:

  • Cliff Asness (AQR Capital) sold 1.3 million Nvidia shares and bought 673,292 Chipotle shares.
  • Israel Englander (Millennium Management) sold 672,242 Nvidia shares and bought 3.5 million Chipotle shares.
  • Steven Cohen (Point72) sold 409,042 Nvidia shares and bought 1.4 million Chipotle shares.
  • Steven Schonfeld (Schonfeld Advisors) sold 370,349 Nvidia shares and bought 131,715 Chipotle shares.

This selling doesn’t mean Nvidia is a poor investment; these managers still hold significant shares in Nvidia, which is the top investment in AQR’s portfolio.

1. Nvidia

Nvidia is essential for the AI industry, holding 80% market share in AI accelerators with its GPUs. It leads in both performance and software tools.

Bank of America analyst Vivek Arya increased Nvidia’s price target to $190, expecting it to maintain a 75% market share in AI accelerators and a 20% annual revenue growth rate. Recently, Nvidia reported a 122% revenue increase to $30 billion, largely driven by AI demand, and earnings jumped 152%.

Nvidia’s new GPU, Blackwell, will launch soon, indicating strong future demand with orders already booked for 12 months. Recently, Nvidia stock is trading at a more attractive valuation of about 64.7 times earnings, with projected earnings growth of 38% annually.

2. Chipotle Mexican Grill

Chipotle operates over 3,500 restaurants, focusing on “food with integrity” and attracting loyal customers with fresh, responsibly sourced ingredients. The company has improved service speed and efficiency, leading to solid financial results: an 18% revenue increase to $3 billion and a 36% rise in net income.

Chipotle shares were actively bought by hedge fund managers in the last quarter, with the stock currently trading at 58.2 times earnings, and earnings expected to grow by 22% annually, despite a high PEG ratio of 2.6.

Investors might consider waiting for a price pullback before buying Chipotle shares.