You might be unaware, but last week unveiled one of the most crucial data releases of the quarter for investors. It was not the long-awaited April inflation report that took center stage. May 15 marked the deadline for institutional money managers with at least $100 million in assets under management to disclose Form 13F to the Securities and Exchange Commission, offering investors a rare peek into the investment moves of Wall Street’s finest in the previous quarter, ending in March.
The “Magnificent Seven” stocks have been lauded for propelling the broad-market indexes to all-time highs. Hence, it’s prudent to analyze how billionaire investors viewed these companies in the first quarter.
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When referring to the Magnificent Seven, we mean seven of the biggest and most influential businesses in the country today, including entities like Google, Apple, and Amazon. These stocks have shown remarkable outperformance compared to the S&P 500 over the past decade, boasting distinct competitive advantages.
However, billionaires diverge in their opinions on these stocks. The latest 13F filings reveal that billionaires shed shares of two Magnificent Seven stocks while gravitating heavily towards another.
Billionaires’ Pullback: Nvidia
The first among the Magnificent Seven that notable billionaire investors seemingly spurned in the first quarter is Nvidia, the linchpin of the artificial intelligence revolution. Eight prominent billionaires turned sellers, offloading significant shares:
- Philippe Laffont of Coatue Management (2,937,060 shares sold)
- Ken Griffin of Citadel Advisors (2,462,716 shares sold)
- Israel Englander of Millennium Management (720,004 shares sold)
- Stanley Druckenmiller of Duquesne Family Office (441,551 shares sold)
- David Siegel and John Overdeck of Two Sigma Investments (420,801 shares sold)
- David Tepper of Appaloosa Management (348,000 shares sold)
- Steven Cohen of Point72 Asset Management (304,505 shares sold)
Why the retreat from what has arguably been the hottest megacap stock on Wall Street? Besides profit-taking, there are potential concerns that caught the attention of these astute investors.
Nvidia’s escalating competition from various quarters presents a looming threat. While external rivals vie for AI-accelerated data center market share, a more substantial challenge may arise from Nvidia’s prime customers themselves.
Remarkably, Microsoft, Meta Platforms, Amazon, and Alphabet, all part of the Magnificent Seven, constitute about 40% of Nvidia’s net sales. Each is developing their AI-GPUs in tandem with Nvidia’s H100 GPUs for high-compute data centers. This growing trend suggests that the peak in Nvidia’s chip demand may be nearing.
History has shown a harsh reality for hyped investment trends. Over the past three decades, exuberant trends have often faced early-stage deflation. Overestimations of technology adoption lead to bubbles, and Nvidia, with a doubling of sales last year due to AI-GPU demand, might be the worst-hit if an artificial intelligence bubble bursts.
Billionaires’ Step Back: Meta Platforms
The surprising abandonment among billionaires during the first quarter extended to Meta Platforms, a social media behemoth. Nine successful billionaires, including the late Jim Simons of Renaissance Technologies, let go of their Meta stock, with substantial shares sold:
- Ole Andreas Halvorsen of Viking Global Investors (2,259,650 shares sold)
- Philippe Laffont of Coatue Management (1,313,528 shares sold)
- Ken Griffin of Citadel Advisors (1,164,151 shares sold)
- Steven Cohen of Point72 Asset Management (1,048,750 shares sold)