Hedge fund Elliott Management has told clients that megacap technology stocks like Nvidia are in "bubble land."

In a letter seen by the Financial Times, the company said that it was "skeptical" that hyperscalers would continue to buy the company's chips in such high quantities and that the AI is "overhyped with many applications not ready for prime time."

The hedge fund added that many of AI's proposed use cases are "never going to be cost-efficient, are never going to actually work right, will take up too much energy, or will prove to be untrustworthy.

“There are few real uses [other than] summarising notes of meetings, generating reports, and helping with computer coding."

Elliott had a small stake in Nvidia in March, but has mostly avoided the largest tech companies. At the same time, it said it would be "suicidal" to short them.

The bubble, the company said, could burst if Nvidia reported poor numbers and it "breaks the spell." The comments echo similar warnings from Goldman Sachs.

Shares in the GPU company are down from a June peak, when it was briefly the world's most valuable company at $3.3 trillion. While it is now worth 20 percent less, it is still up 120 percent this year and 600 percent over the start of last year.

This quarter, hyperscalers announced tens of billions of dollars in Nvidia orders for the coming year, although plans for AI data center rollouts are in flux due to a last-minute Blackwell delay by Nvidia.

The chip designer is also facing two investigations by the Justice Department.