According to regulatory filings, big hedge funds have dumped some of 2024’s top artificial intelligence stocks ahead of the third quarter selloff. Filings released this week show a host of billionaires dumping shares in Nvidia, Alphabet and Meta Platforms, the companies that have been key drivers of the market rally this year. The selloff comes ahead of a volatile period for Wall Street’s beloved AI trade as investors take profits on some of 2024’s hottest names. The unwinding of the yen’s “carry trade” last week, combined with weak July employment data to spur recession fears, contributed to the weakness. Alphabet, Microsoft and Amazon have all fallen since the start of the third quarter. NVDA YTD Mountain NVIDIA, YTD Some big investors have not been shy about expressing concern that short-term AI trades are overvalued. Stanley Druckenmiller of the Duquesne Family Office told CNBC in May that he sold some of his Nvidia shares as the stock “went from $150 to $900” in March. The billionaire investor reduced his holdings by about 88% in the second quarter to $26.4 million, according to securities filings. Another big gainer in Nvidia during the period was Appaloosa. A hedge fund led by David Tepper reduced its stake in the AI chip maker by 84%, reducing its holdings to about $85 million. Soros Capital liquidated its investment. Alphabet also saw heavy selling by hedge funds last quarter. Daniel Sundheim’s D1 Capital sold a $400 million position in the search giant and a $382 million position in Meta Platforms. Both stocks were among the fund’s top holdings in the first quarter. Loeb, Tepper and Bill Ackman’s Pershing Square also reduced its Alphabet holdings, while Baupost’s Seth Klarman reduced his stake by 64%. Hedge funds also reduced their holdings in other big mega-cap stocks, including Amazon, Microsoft and Apple. Besides Nvidia and Alphabet, Appaloosa reduced its holdings in Amazon, Microsoft, Meta Platforms and Advanced Micro Devices. Druckenmiller reduced his holdings in software giants Microsoft and Apple by 64% and 79%, respectively. Earlier this month, Warren Buffett’s Berkshire Hathaway said it had sold nearly half its stake in the iPhone maker. Loeb’s Third Point reduced its holdings in Meta Platforms and Microsoft by 11% each. To be sure, some big investors have beefed up major tech deals. Loeb invested a new $411 million in Apple, but maintained his Amazon holdings, totaling $986 million. He also increased his holdings in Taiwan Semiconductor Manufacturing Co. by 72%. Starboard Value’s Jeff Smith and Mason Morfitt’s ValueAct Capital Management both increased their bets on Salesforce, while Andreas Halvorsen’s Viking Global increased its stakes in Apple, Amazon and Microsoft. The filings are only through the end of the second quarter, so it’s possible that some major investors bought back shares during the recent sell-off. Nvidia shares rose nearly 20% last week but are still down more than 11% from their all-time highs.
