Funds punished for owning too few Nvidia shares after stunning 230% rally

NEW YORK: Nvidia Corp’s soaring rally has thrilled investors this year – except for the sizeable number of fund managers who avoided what they believe to be an expensive stock.

Shares of the semiconductor company – whose chips power generative AI apps such as ChatGPT – have more than tripled this year in a rally fueled by excitement over the prospects for artificial intelligence. Yet many funds hold less of the stock in their portfolios compared with Nvidia’s weight in key equity indexes, making it tougher for them to beat their benchmarks.