For 30 years, investors have stayed on top of the next big investment trends. Although nothing has been more transformative than the advent of the Internet, innovations and trends such as genome sequencing, business-to-business trading, 3D printing, blockchain technology, and the Metaverse have captured the attention of both professional and retail investors. Masu.
Nothing intrigues investors more than the artificial intelligence (AI) revolution right now. Machine learning allows software and systems to evolve over time and become more proficient at tasks. This is what gives AI its widespread appeal in virtually every field and industry.It’s also what created semiconductor stocks. Nvidia (NASDAQ:NVDA) The hottest thing since sliced bread.
Nvidia has become the face of the AI movement
Nvidia’s graphics processing units (GPUs) have been popular in the personal computing gaming community for more than a decade and have gained traction among crypto miners during major crypto bull markets, but the company’s infrastructure works in high-computing data centers. It was the brightest.
Nvidia’s A100 and H100 GPUs dominate the AI-powered datacenter.analyst of citygroup Last year, he opined that NVIDIA could control more than 90% of the GPUs that enterprises deploy in high-computing data centers by 2024.
What really helps Nvidia is its lack of top-notch GPUs. With demand outstripping supply, the company was able to significantly increase the price of its available GPUs, resulting in sales falling to its 2024 fiscal year (Nvidia’s fiscal year ends in late January). It has more than doubled.
But not everyone buys into Nvidia’s growth story. Eight billionaire investors have reduced their respective funds’ stakes in this Wall Street darling, based on the latest Form 13F filings from the Securities and Exchange Commission. Specifically, three billionaire wealth managers reduced their stakes in funds by more than 1 million shares, including:
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Millennium Management Israel Englander: Sold 1,689,322 shares.
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Jeff Yass of Susquehanna International: Sold 1,170,611 shares.
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Steven Cohen of Point72 Asset Management: Sold 1,088,821 shares.
While some of this selling may just be profit-taking, Nvidia has a growing list of headwinds to contend with this year. In addition to increasing external competition, the company is expected to contend with increasing AI-GPU internal competition with top customers, potential margin cannibalization, and continued export restrictions to China.
Perhaps even more interesting is a look at the 10 artificial intelligence stocks these three billionaires were buying when they sold their Nvidia stock.
Billionaire Israeli-English piles into AI stock ‘Magnificent Seven’
No billionaire money manager sold more Nvidia stock in the fourth quarter than Millennial Israel Englander. While he and his team were busy paring down their holdings in Wall Street’s best-performing mega-cap stocks, they were also hitting the buy button on three of his “Magnificent Seven” constituents, including: .
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alphabet (NASDAQ:Google)(NASDAQ:GOOG): Purchased 2,446,316 shares of Class A stock (GOOGL)
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apple (NASDAQ:AAPL): Purchased 2,174,695 shares
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Amazon (NASDAQ:AMZN): Purchased 85,532 shares
“Why?” The rationale for these purchases is simple. Because they are each leaders in their industry. Google, owned by Alphabet, has held more than 90% of the world’s monthly Internet search share for about nine years. Meanwhile, Amazon’s e-commerce marketplace is by far the world’s leading online retail site, and Amazon Web Services (AWS) commands the highest share of cloud infrastructure services spending. Finally, Apple’s iPhone controls more than half of the domestic smartphone market share.
But these components of the Magnificent Seven are also looking to AI to fuel their future growth. Alphabet and Amazon are some of Nvidia’s major customers that are currently developing their own AI chips. Both companies are building generative AI solutions into their respective cloud infrastructure services platforms to help businesses build applications and customize messages for consumers.
Apple has also developed its own AI infrastructure, with the company’s processors capable of running generative AI on MacBooks. For now, Apple’s relationship with AI is primarily about integrating solutions like predictive text on the iPhone.
It’s clear that Israel Englander sees much upside in Nvidia’s peers among the Magnificent Seven.
Billionaire Jeff Yass added stocks to AI businesses with a proven track record of surviving the AI bubble.
The billionaire who sold the second-largest amount of NVIDIA stock in the fourth quarter was Susquehanna’s Jeff Yass. While reducing the fund’s Nvidia stake by 27%, Mr. Yas and his investment aides will invest in three companies with a track record of ties to artificial intelligence that will withstand the possibility of an AI bubble bursting: had acquired two companies.
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alibaba (NYSE: Baba): Purchased 5,297,854 shares
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tesla (NASDAQ:TSLA): Purchased 527,008 shares
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microsoft (NASDAQ: MSFT): Purchased 115,276 shares
As mentioned above, the important thing about these AI stocks is that even if the AI bubble bursts, they will likely protect their core businesses from being caught in a major downdraft. For example, Alibaba is China’s No. 1 e-commerce platform, with Taobao and Tmall together accounting for almost 51% share of online retail sales. Alibaba Cloud is also No. 1 in China market share (as of March 2023) and should continue to grow given that enterprise spending on cloud services is still in the very early stages.
Tesla is North America’s largest electric vehicle (EV) manufacturer and the only pure EV manufacturer with recurring profits. Although the company is incorporating AI solutions into its self-driving technology, its success will ultimately depend on its ability to sell or lease its EVs. If history repeats itself and the AI bubble bursts, Tesla’s performance will ultimately determine where the stock goes over the long term.
Microsoft, on the other hand, has money-making legacy divisions like Windows and Office and high-growth initiatives like its cloud infrastructure services platform Azure, the world’s second-largest cloud infrastructure services provider by spending. , behind only AWS. Microsoft is probably making a bigger bet on AI than Alibaba or Tesla, but it’s probably okay if expectations for AI are tempered at some point in the not-too-distant future.
Billionaire Stephen Cohen buys up AI stocks on behalf of Nvidia
The last billionaire to actively sell NVIDIA stock during the quarter ended December was Steven Cohen of Point72 Asset Management. While Mr. Cohen and his team are busy reducing his 66% stake in Point72’s stake in Nvidia, a central figure in AI infrastructure, the following are incidental beneficiaries of the AI movement: I had acquired four of his companies.
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oracle (NYSE:ORCL): Purchased 2,178,533 shares
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western digital (NASDAQ:WDC): Purchased 971,494 shares
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Dell Technologies (NYSE:Dell) Purchased 670,677 shares
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intuitive surgery (NASDAQ:ISRG): Purchased 301,908 shares
Similar to what Jeff Yass did at Susquehanna, Point72’s investment team believes that by focusing on businesses that could potentially benefit from AI but would have less direct impact if the bubble bursts. , appears to be trying to reduce the risk of the fund. While total revenue for Oracle’s most recently reported quarter (ending February 29, 2024) was up just 7%, infrastructure-as-a-service revenue soared 49% year-over-year. Oracle is well-positioned to be a long-term winner in AI infrastructure, although it could easily fall back on its traditional flagship segments if AI demand resets.
Western Digital may be exploiting AI-driven storage. Just as Western Digital experienced a surge in demand during the initial wave of enterprise cloud services spending, the increased demand for storage in AI-powered data centers should be music to the ears of executives. This could pave the way for the company’s high-transfer rate NAND flash memory solutions to become the standard in data centers.
In keeping with this theme, Dell Technologies has a core computing segment to fall back on if the AI bubble materializes. Nevertheless, we are seeing very strong demand for customizable rack servers used by companies running AI-powered data centers. While this currently represents a small portion of Dell’s business, Dell could see sustained long-term benefits as AI solutions become more widespread.
Cohen and his team also worked with Intuitive Surgical, a developer of robotic-assisted surgery systems. This is a company that leverages AI to help surgeons study their own surgical data to improve patient outcomes. The company should ultimately enjoy sustained double-digit sales growth as the da Vinci Surgical System gains market share in a variety of soft tissue surgical indications. Since the turn of the century, no company has come close to the installed base of surgical support systems that Intuitive Surgical has implemented.
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Citigroup is an advertising partner of The Motley Fool’s Ascent. Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Sean Williams has worked at Alphabet, Amazon, Intuitive Surgical, and Western Digital. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Intuitive Surgical, Microsoft, Nvidia, Oracle, and Tesla. The Motley Fool recommends his Alibaba Group and recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
3 Billionaires Are Selling Artificial Intelligence (AI) Stock Nvidia and Buying These 10 AI Stocks Instead Originally published by The Motley Fool
