Billionaire investor Dan Loeb, through his hedge fund Third Point LLC, has drastically reduced his stake in Nvidia Corp. by nearly 90% during the first quarter of 2026, despite publicly praising the semiconductor sector's attractiveness amid the AI boom. Nvidia reported impressive first-quarter earnings of $81.6 billion, an 85% year-over-year increase, and CEO Jensen Huang highlighted the expansive growth in AI infrastructure. However, Loeb's actions suggest a strategic retreat to lock in profits, as he also exited positions in Microsoft Corp. and Alibaba Group while increasing investments in Alphabet and Meta. This portfolio overhaul reflects a cautious approach to high expectations, with Loeb warning about the risks of investing when market sentiments are overly optimistic. Despite Nvidia's stock rising 20.30% year-to-date, it has slightly lagged behind the Nasdaq 100's 21.06% increase. Loeb's moves indicate a focus on navigating market volatility while maintaining a keen eye on fundamental performance.