Stanley Druckenmiller is one of the most successful investors of all time.
Druckenmiller, who worked for George Soros, helped guide the strategy to “bring the Bank of England to ruin,” netting the Bank of England more than $1 billion in profits by shorting the British pound and causing it to crash in 1992. brought about.
But this deal was no fluke. Since founding Duquesne Capital Management in 1981, Mr. Druckenmiller’s hedge fund has never had a down year, with periods including the Black Monday crash, the dot-com bust and the Great Financial Crisis. was. Duquesne Capital Management’s average annual return from 1986 to 2010 was his 30%, dwarfing the entire market.
Mr. Druckenmiller closed the fund in 2010, but did not stop investing. He currently runs the Duquesne Family Office, which has assets of approximately $3.4 billion as of his fourth quarter update. The famous investor has been outspokenly bullish on AI stocks lately. Like many other CEOs and investors, the billionaire sees AI as a major innovation, saying last year that “AI has the potential to be as transformative as the internet.”
Not surprisingly, AI stocks make up a significant portion of his portfolio. In fact, he only accounts for his 40% of his holdings in three of his AI stocks. Let’s take a look at those stocks and see if they’re worth buying today.
Image source: Getty Images.
1. Nvidia
It may not be surprising to see Nvidia (NVDA -0.12%) It’s at the top of this list. Nvidia dominates his AI story, making him the biggest winner in terms of market capitalization, increasing by more than $1.5 trillion since the beginning of 2023.
At the end of 2023, Mr. Druckenmiller owned 617,494 shares worth approximately $306 million and had call options on an additional $242 million worth of shares. Together, these holdings account for 16% of his portfolio. Given Nvidia’s meteoric rise since the beginning of the year, these options could have yielded handsome returns for the billionaire investor.
Druckenmiller began acquiring Nvidia in the fourth quarter of 2022, suggesting he jumped into the stock after the launch of ChatGPT, which signaled the beginning of the AI boom. The investor said in the fall that NVIDIA stock was in “nosebleed territory,” but the stock has continued to rise, and his long calls in the fourth quarter increased his stake in NVIDIA stock by 30%. % in the fourth quarter, indicating that it has changed its mind. It’s unclear whether he sold his NVIDIA stock so far in the first quarter, but based on current prices, holding onto it would have been the right move.
2.Microsoft
Following Nvidia, microsoft (MSFT -2.07%) It may be the next best-known AI stock. The tech giant is a close partner of ChatGPT’s parent company, OpenAI, and has invested billions of dollars in AI startups, giving it an edge in emerging technologies. His OpenAI capabilities are embedded across products such as Azure, GitHub, Bing, and the Office suite, and his Copilot, like his ChatGPT, is unique to answer questions, improve communication, and guide users. I am designing.
Druckenmiller is not new to Microsoft. He first started buying stock in his 2015 and added to his stake in the fourth quarter, buying 68,860 shares for a total of 1.09 million shares, or his $408.4 million. Microsoft is his largest stock holding, accounting for 12% of his portfolio.
It’s worth noting that Druckenmiller sold off all of his holdings in the fourth quarter. alphabet, is a rival of Microsoft and has shown a clear preference for Microsoft. That decision seems to have paid off, as Microsoft is up 10% this year, while Alphabet is down slightly.
3. Coupang
Korea’s e-commerce leader Coupang (CPNG -2.05%) While it may not be an AI stock in the traditional sense, the company’s work with artificial intelligence has positioned it in this category.
Coupang leverages artificial intelligence in a number of ways, including robots in its distribution center called autonomous guided vehicles that can carry more than 2,000 pounds and navigate the warehouse. Reduced human workload by approximately 65%.
Coupang also leverages AI to assist its warehouse workers, providing each employee with a personal digital assistant (PDA) and using AI and machine learning to allocate work and optimize routes.
Mr. Druckenmiller owned 22.9 million shares of Coupang stock at the end of the year, and added 2 million shares to his holdings in the fourth quarter, bringing his total holdings to $371 million (11% of his portfolio). ). He held Korean e-commerce stocks even before they went public. It’s not entirely clear why Druckenmiller is betting on Coupang, but the stock currently offers attractive growth at an affordable price.
Which AI stocks are good buys?
Of these three stocks, I think NVIDIA and Microsoft look like solid buys. Yes, their stock prices have risen significantly over the past year, but these companies are leaders in their respective areas of AI (Nvidia in hardware, Microsoft in software), and their leadership positions will continue to grow in the coming years. It could pay off.
Coupang looks equally promising, but is more risky. The company has experienced solid growth and trades at a reasonable valuation. But the company is already deeply entrenched in the domestic market, so long-term growth appears to depend on expanding beyond South Korea into new markets. This could pay off for the company, especially since “products in development” delivered a 105% increase in revenue to his $273 million in the fourth quarter, but this is a riskier strategy.
Overall, investors are better off sticking with Nvidia and Microsoft here. If you are his AI investor, it makes sense to follow Mr. Druckenmiller’s comments and moves as the investment environment develops. The billionaire called his Nvidia rally, and he may have some foresight as to where his AI boom will go next.
