Over the last three decades, investors have ridden waves of transformative investment trends, from the rise of the internet to blockchain technology. However, the current buzz around the artificial intelligence (AI) revolution has captured the attention of both seasoned professionals and everyday investors alike.
At the forefront of this revolution stands Nvidia, with its cutting-edge GPU technology. Although initially popular with the gaming community, Nvidia’s high-compute data centers have solidified its reputation within the AI landscape. With its A100 and H100 GPUs dominating AI-accelerated data centers, the company has seen a significant surge in sales.
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Nvidia’s Position in the AI Movement
In 2024 alone, Nvidia’s sales more than doubled, fueled by the heightened demand for its GPUs and subsequent price increases. Despite this success, recent Form 13F filings reveal that several billionaire investors have begun to offload their positions in Nvidia, citing potential headwinds such as market competition and export restrictions.
Interestingly, while some are backing out of Nvidia, others are turning towards alternative AI investments. Three prominent billionaire investors, including Israel Englander, Jeff Yass, and Steven Cohen, have notably reduced their stakes in Nvidia while shifting towards 10 other AI stocks.
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Diversification Among Billionaire Investors
Israel Englander, for instance, opted for the “Magnificent Seven” of AI stocks, focusing on industry leaders like Alphabet, Amazon, and Apple. These companies, renowned for their market dominance, are also integrating AI technologies for future growth.
Meanwhile, Jeff Yass leaned towards time-tested AI businesses resistant to market bubbles. His strategy reflects a shift in sentiment towards stable and established AI players.
Navigating the AI Seas: Billionaires Ditch Nvidia for Time-Tested Buoyant Stocks
Susquehanna’s Jeff Yass and AI Investments
In the realm of high-stakes financial maneuvers, Susquehanna’s Jeff Yass emerged as a standout figure during the fourth quarter. Yass, together with his cohorts in investment, decided to jettison a significant chunk of their holdings in Nvidia, to the tune of a 27% reduction. This strategic move was juxtaposed with the acquisition of a triumvirate of established, AI-laden enterprises that possess the fortitude to weather a potential AI bubble pop.
Firmly grounded in this narrative is the stalwart nature of these AI-centric equities. If one were to envisage the hypothetical scenario of an AI market collapse, these corporations, like Alibaba and its commanding position in the Chinese e-commerce sphere, are poised to remain steadfast due to their robust core activities. Moreover, Tesla, serving as North America’s premier electric vehicle manufacturer, has artfully woven AI technology into its self-driving innovations, yet its financial destiny primarily hinges on the efficacious retail or leasing of electric vehicles.
Another noteworthy player in this milieu is Microsoft, equipped with its time-honored segments like Windows and Office. Coupled with the rapid growth endeavors such as Azure, currently the second-largest cloud infrastructure service provider globally, Microsoft has laid a foundation that seems impervious to the volatilities of the AI realm.
Steven Cohen’s Pivot to AI Ancillary Stocks
Interestingly, another billionaire luminary who opted for a strategic shift away from Nvidia was Steven Cohen from Point72 Asset Management. Just like Yass, Cohen maneuvered swiftly to reduce Point72’s exposure to the AI behemoth Nvidia—paring down their stake by a notable 66%. Instead, focus was redirected towards four auxiliary beneficiaries within the AI ecosystem.
Likewise, similar de-risking tactics were observed in Point72’s investment playbook, with an emphasis on entities that can capitalize on AI while being shielded from its potential downfall. Oracle, for instance, showcased a modest 7% uptick in total sales in its latest fiscal quarter, yet saw a meteoric 49% surge in infrastructure-as-a-service sales from the previous year.
Western Digital, in its own right, emerged as a clandestine participant in the AI storage narrative. As demands burgeon in AI-driven data centers, the prospects for their high-speed NAND flash memory solutions teem with promise, potentially standardizing data centers.
Furthermore, Dell Technologies, although maintaining a robust foundation in core computing, has witnessed a surge in demand for specialized rack servers tailored for AI-driven data centers—a harbinger of enduring prosperity as AI solutions pervade the market.
Cohen’s team also delved into the domain of robotic-assisted surgical systems, notably embracing Intuitive Surgical. Leveraging AI to empower surgeons to refine procedural methodologies, Intuitive Surgical appears poised for sustained double-digit growth, underpinned by the widespread adoption of its da Vinci surgical system.