Manchester & London (MNL), the £360m global technology trust, has almost halved its position in Nvidia, citing problems with the AI chip maker’s rollout of its new Vera Rubin platform.

Fund manager Mark Sheppard yesterday said he had made “material changes” to the portfolio with its holding in Nvidia (NVDA), the world’s most valuable company at $5trn, cut to 24.5% from 42.1% at the end of April. 

“NVDA is still our biggest position and we still believe that the stock will see $500 in three years’ time, but the next three months may see Vera Rubin delays and further losses in market share that we have already anticipated,” Sheppard of M&L Capital Management said in a newsletter about Nvidia’s development of a supercomputing platform named after the American astronomer who discovered dark matter.

“NVDA had the opportunity with Vera Rubin to grasp the CPU [central processing unit] market but by over specification to the Vera Rubin racks, they have dropped the ball through delays,” he said in reference to the platform’s unified “rack-scale” system that has reportedly thrown up complex networking and energy management problems.

Nvidia claims the new platform will be much more efficient than its current Blackwell architecture but the difficulties in ensuring supplies of the latest high-bandwidth memory chips from SK Hynix and Micron have led some analysts to lower shipment forecasts.

“It is a setback that we believe will be overcome but it gives AMD and ARM some space to run,” said Sheppard in reference to Advanced Micro Devices, which has entered MNL’s top 20 in sixth place at 6% of net assets, and ARM, the British Nasdaq-listed chip designer, which does not appear.

Strong first quarter results from AMD saw its Nasdaq-listed shares leap over 18% yesterday, sparking a 2% rally in the US technology index with sentiment also bolstered by hopes of an end to the war with Iran.

The decision to take some profits in Nvidia, which is up 11% this year and 77% over 12 months, modifies the bullish view Sheppard had in March. “While we will continuously recalibrate this target as new data emerges, we currently see no superior risk-adjusted vehicle to capture the value of the AI transition,” he said about Nvidia in MNL’s half-year results. 

Investors in MNL are accustomed to sudden portfolio changes. In February Sheppard cut Microsoft from 21.8% to 4.8% on concern that AI developers such as Anthropic could challenge its software business.

The list of MNL’s latest top holdings reveals that Sheppard has now broadened the investment trust’s exposure to the chip and artificial intelligence sector. The VanEck Semiconductor exchange-traded fund (ETF) is now a 4.9% holding with 4.8% held in the Morgan Stanley Broad AI Basket of around 29 stocks. Nvidia rival Broadcom remains at 11% of the fund with Taiwan’s chip foundry giant TSMC also level at 10%.

Bloom Energy Corp, a US manufacturer of solid oxide fuel cells that produce on-site electricity for data centres, has jumped from 3.3% to 9.95%, putting it in fourth position in the portfolio. This may not reflect additional investment by Sheppard as the shares have more than trebled this year to over $285, valuing it at $81bn.

Sheppard, who owns over 62% of MNL’s shares through his family controlled M&M Investment Company, cited Morgan Stanley’s research that forecasts capital expenditure by the top five “hyperscalers” Amazon, Microsoft, Alphabet’s Google, Meta and Oracle will hit $1.1trn next year, the manager’s $1trn projection. Expectations for this year are $830bn.

“Note this is the first time any broker has punched in with a forecast higher than ours and we would note that when we first published these forecasts many people said we were deranged. This is why we retain a high level of confidence that NVDA can hit our $500 target price but some painful patience may well be required,” said Sheppard.

Shares in MNL have rallied 52.5% in the past year but have lagged rivals Allianz Technology (ATT) and Polar Capital Technology (PCT) which have advanced 71.5% and 106.6% respectively. That partly reflects a widening in MNL’s share price discount to net asset value to over 25% after the company had to suspend share buybacks last September. In compensation, the company hiked its dividend by 30% with the first of the enhanced 20p per share payments due tomorrow.

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