Swedbank Robur Technology’s Kristofer Barrett, who made Nvidia the top holding last year, said he is hopeful for the long haul but admits that the valuation is not very appealing.

The Swedbank fund, registered as "promoting" environmental, social and governance standards under European Union rules, returned 53 per cent in 2023.

He is concerned that Nvidia might fall victim to its success as it has become a retail stock which suggests a bubble waiting to burst.

According to fresh data provided by Morningstar Direct, the share of ESG funds holding Nvidia shares dropped to 15 per cent of the total at the end of December from a high of 20 per cent in the second quarter of 2023.

So far, warnings of a sudden slump in Nvidia shares have generally been followed by jaw-dropping gains. Last year, Nvidia's market value soared almost 240 per cent and was already up almost 80 per cent in 2024. According to Bloomberg data, of the 66 analysts tracking Nvidia, none are advising clients to sell, while 60 say investors should keep buying the shares.

But there are still some concerns. Cathie Wood, despite being a vocal supporter of the transformational potential of AI stocks early on in the cycle, actively trimmed her exposure to Nvidia last year and other big-name stocks tied to the AI boom.

Hedge funds that piled into tech stocks before Nvidia's latest set of results are now exiting at the fastest pace in seven months, according to data from Goldman Sachs Group prime-brokerage unit.

Christian Blink, who now runs the Swedbank fund, said Nvidia "might be a bit stretched" in the short term, with the possibility of some investors cashing in.

Further out, the outlook is positive. "We believe that people tend to underestimate the long-term implications of generative AI, and Nvidia is an enabler of that technology," Blink said.

And Nvidia remains the fund's biggest holding, now accounting for almost 10 per cent of the roughly €12.6 billion Swedbank portfolio, he said.

Blink said a bubble bursting was "always a worry. "I don't think there is one, but many factors exist for generative AI to become one. We are monitoring that."