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While semiconductor giant Nvidia (NASDAQ:NVDA) has so far dominated the tech ecosystem thanks to the artificial intelligence (AI) wave, sentiment in the space may be fading. As of this writing, NVDA stock is dipping another 3% after already suffering a down session on Thursday.

Feeding off the recently rising concerns for the stock, Paul Wick of Seligman Investments reduced his exposure to Nvidia. Per Bloomberg News, Wick raised doubts about the semiconductor firm’s ability to generate earnings expansion. The investor stated during a video call at a UBS Group event that his “enthusiasm has moderated somewhat over the last one to two weeks.”

Wick did not specify the magnitude of the trimmed exposure to NVDA stock. However, the investor pointed out a major risk factor against Nvidia that doesn’t apply as much to rivals like Microsoft (NASDAQ:MSFT) or Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). Essentially, Nvidia derives 60% to 70% of its top line from its top 10 customers. According to Wick, this exposure makes Nvidia “inherently a much riskier company than Microsoft or Google who have very low customer concentration and thousands upon thousands of customers.”

Extreme Valuation Also Clouds NVDA Stock

Earlier this year, NVDA stock made headlines when a CNBC report indicated that one customer represents the lion’s share of Nvidia’s top-line contributions. UBS analysts speculated that the mystery customer is Microsoft, which may have padded some 19% of Nvidia’s revenue last year. Naturally, this framework raises the dependency concern that Wick mentioned.

In addition, the hedge fund manager has expressed doubts about the sustainability of the company’s extreme valuation. At the moment, NVDA stock trades at 50 times forward earnings, per Yahoo Finance data.

For Wick, what has driven skepticism is that generative AI companies — which have ravenously purchased Nvidia GPUs — actually show low returns on invested capital. Further, with Nvidia’s top customers developing their own processors, this dynamic presents a headwind against NVDA stock.

Still, it wouldn’t be accurate to characterize Wick as being outright bearish on Nvidia. Per StreetInsider, NVDA is still one of Seligman Investments’ top holdings.

On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.