Since the start of the internet era thirty years ago, no investment trend has captivated the imagination quite like artificial intelligence (AI).
AI empowers software and systems to autonomously learn and grow, offering applications across all industries. Analysts at PwC predict that AI could contribute nearly $16 trillion to global GDP by 2030.
While many companies are poised to benefit from the AI surge, semiconductor giant Nvidia (NASDAQ: NVDA) has emerged as a front-runner in this technological wave. Nvidia’s high-performance GPUs have become standard in AI-accelerated data centers, with the company claiming 98% of the 3.85 million AI-GPUs shipped in 2023, as reported by TechInsights.
In the fiscal first quarter, Nvidia experienced a significant surge in sales and exceeded a 78% adjusted gross margin, thanks to the booming demand for its H100 GPU. Despite operational success and a 10-for-1 stock split creating buzz, Nvidia has found itself on the exit ramp as more than a handful of billionaire investors have offloaded their shares.
Turning The Tables: Eight Billionaire Investors Bid Adieu to the AI Leader
Within 45 days after the quarter’s end, institutional investors with over $100 million in assets under management must submit Form 13F to the Securities and Exchange Commission, revealing their latest buying and selling activities. Based on the most recent 13F filings, eight prominent billionaires have opted to sell Nvidia stock, including notable individuals and large share amounts:
- Philippe Laffont of Coatue Management (2,937,060 shares)
- Ken Griffin of Citadel Advisors (2,462,716 shares)
- Israel Englander of Millennium Management (720,004 shares)
- Stanley Druckenmiller of Duquesne Family Office (441,551 shares)
- John Overdeck and David Siegel of Two Sigma Investments (420,801 shares)
- David Tepper of Appaloosa Management (348,000 shares)
- Steven Cohen of Point72 Asset Management (304,505 shares)
This successive quarter of divestment from top-tier billionaire investors may be just profit-taking with Nvidia’s exceptional market performance. However, historical perspective on revolutionary technologies, innovations, and trends, coupled with intensifying competition in the AI realm, suggests caution.
The history of paradigm-shifting trends, from the internet boom in the ’90s to subsequent bubbles, warns of exaggerated expectations and inflated valuations. Competitors encroaching on Nvidia’s domain and the company’s inability to meet the burgeoning demand for AI chips pose potential threats to its market share.
Charting New Waters: Billionaires Pivot to Alternative Investments
Although these prominent investors are offloading Nvidia shares, they have not remained idle, redirecting their investments into other avenues. Here are the seven top-notch stocks these billionaires have been embracing in the first quarter:
1. Philippe Laffont: Taiwan Semiconductor Manufacturing (10,027,552 shares purchased)
Intriguingly, Philippe Laffont, who was among Nvidia’s major sellers in the last quarter, opted to invest heavily in Taiwan Semiconductor Manufacturing (NYSE: TSM). The leading chip-fabrication firm has rapidly expanded its chip-on-wafer-on-substrate capacity, vital for the high-bandwidth memory packaging essential in AI-accelerated data centers.