Ka-ching: NZ Super Fund cleans up as AI star Nvidia becomes world’s most valuable company

CEO Jensen Huang during the keynote address of Nvidia GTC in San Jose, California, on March 18. His firm's chips power systems are used to train and run AIs. Photo / AP

Overall, the Government and businesses have taken a relatively sleepy approach to the AI (artificial intelligence) boom.

But an investment in one of the biggest artificial intelligence stars, chipmaker Nvidia, has paid off big-time for the New Zealand Superannuation Fund.

As of December 31 last year, our Crown superannuation fund had 771,114 Nvidia shares, worth around US$605 million ($991m), or roughly five times its value in the fund’s June 2021 disclosure.

By May this year, it had upped its stake slightly to 778,519, which became 7,785,190 after Nvidia’s 10:1 stock split earlier this month, an NZ Super Fund spokesman confirmed this morning.

Nvidia – already up 170 per cent this year during the AI boom – had another 3.5 per cent bump today, taking its market cap to US$3.34 trillion as it passed Apple ($3.29t) and Microsoft (US$3.20t) to become the world’s most valuable company.

The latest jump means the $75.5b NZ Super Fund’s stake in the chipmaker is now worth US$1.06b or around $1.75b.

The Super Fund also has major holdings in other members of the Magnificent Seven: In its December disclosure it detailed stakes in Apple (with shares worth $1.4b), OpenAI backer Microsoft ($1.2b), Alphabet ($305m), Tesla ($338m), Meta ($330m) and Amazon ($245m).

Could it end in tears?

The Magnificent Seven’s prominence for the Super Fund’s offshore equities is not so much a function of making a bet on AI as its external managers simply following the US indexes, which Big Tech has come to dominate.

Nvidia has had boom-and-bust periods before, tied to its graphical processing unit chips being used for bitcoin mining and gaming (which spiked during lockdowns). Today, its silicon is being used in data centres – some renamed “AI factories” to capitalise on the current buzz – for training and running AIs.

Demand seems insatiable for Nvidia and other chipmakers.

Last month, Nvidia reported quarterly revenue that had tripled year-on-year to US$26b (including $10b from data centres), while net profit soared seven-fold to US$14.88b.

But nevertheless, the NZ Super Fund has been notably more front-foot than our other major fund, run by ACC – which beyond its more conservative investing remit is headed by something of a tech boom sceptic.

“The US market’s been driven by a few large tech stocks at the top in recent times. There’s a lot of optimism among investors that these stocks are leading their field and that they’re dominant and they’ll earn returns accordingly. And that may work out to be the case,” ACC chief investment officer Paul Dyer told Markets with Madison.

A pick-and-shovel stock?

There are other cautious voices. Veteran US publisher and venture capitalist Pat Kenealy, in town recently as a Hi-Tech Awards judge, led IDG Ventures investment in Netscape, the pioneering web browser firm that briefly ruled in the 1990s.

“Nvidia is the Netscape of today. We were investing in a tool,” Kenealy told the Herald.

Similarly, network hardware maker Cisco – seen as one of the “Four Horsemen of the Internet” during the dotcom boom – turned out to be pick-and-shovel stock: a solid performer over the past two decades, but never returning to anything like its 1990s high after a millennium crash.

Kenealy says look at the companies that are using the tools. With AI, he says that means companies controlling data.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.