3 billionaires are selling artificial intelligence (AI) stock Nvidia and buying these 10 AI stocks instead.

For three decades, investors have had no shortage of investment trends for the next big thing. While nothing is as transformative as the advent of the Internet, innovations and trends including genome decoding, business-to-business, 3D printing, blockchain technology, and the metaverse have captured the attention of professional and everyday investors alike. has done

At the moment, investor interest is driving nothing like the artificial intelligence (AI) revolution. With machine learning, software and systems have the ability to evolve over time and become more adept at what they do. This is what makes AI so widely appealing in virtually every field and industry. It’s also what made semiconductor stocks. Nvidia (NASDAQ: NVDA ) The hottest thing since sliced ​​bread.

Image source: Getty Images.

Nvidia has become the face of the AI ​​movement.

Although Nvidia’s graphics processing units (GPUs) have been popular in the personal computing gaming community for more than a decade, and its GPUs have gained traction with cryptocurrency miners during major crypto bull markets, these high-compute data Centers are where the company has its infrastructure. The brightest.

Nvidia’s A100 and H100 GPUs are nothing short of dominant in AI-accelerated data centers. But the analyst Citigroup It opined last year that Nvidia could control a 90% share of GPUs deployed by enterprises in high-compute data centers by 2024.

What has really helped Nvidia is its lack of high-end GPUs. As demand has dwarfed supply, it has been able to significantly increase the price of available GPUs, more than doubling its sales in fiscal 2024 (Nvidia’s fiscal year ends in January). I finished).

But not everyone is on board with Nvidia’s growth story. Eight billionaire investors trimmed their respective funds’ stakes in the Wall Street darling, based on the latest round of Form 13F filings with the Securities and Exchange Commission. Specifically, three billionaire money managers reduced their funds’ holdings by more than 1 million shares, including:

  • Israel Englander of Millennium Management: sold 1,689,322 shares.

  • Jeff Yass of Susquehanna International: sold 1,170,611 shares.

  • Steven Cohen of Point 72 Asset Management: sold 1,088,821 shares.

While some of these sales may amount to nothing more than benign profit-taking, Nvidia has a growing list of headwinds to contend with this year. In addition to increased external competition, the company is expected to contend with increased internal AI-GPU competition from its top customers, the potential for margin cannibalization, and ongoing export restrictions to China.

Even more interesting is a look at the collective 10 artificial intelligence stocks that these three billionaires were buying when they were selling Nvidia shares.

Image source: Getty Images.

Billionaire Israel Englander piles into AI stock’s “magnificent seven”

No billionaire money manager shed more Nvidia shares during the fourth quarter than Millennium’s Israel Englander. While he and his team were busy reducing their stakes in Wall Street’s top-performing megacap stocks, they were mashing the buy button for a trio of “Magnificent Seven” ingredients, including:

  • the alphabet (NASDAQ: GOOGL )(NASDAQ: GOOG): 2,446,316 Class A shares (GOOGL) were purchased.

  • apple (NASDAQ: AAPL ): 2,174,695 shares were bought.

  • Amazon (NASDAQ: AMZN ): 85,532 shares were bought.

“Why?” The reason behind these purchases is simple: they are the leaders of the respective industry. Alphabet’s Google has taken more than 90% of the global monthly internet search share since almost nine years ago. Meanwhile, Amazon’s e-commerce market is far from the world’s leading online retail site, while Amazon Web Services (AWS) accounts for the largest share of cloud infrastructure service spending. Finally, Apple’s iPhone controls more than half of the domestic smartphone market share.

But these brilliant seven ingredients are also relying on AI to fuel their future growth. Alphabet and Amazon are some of Nvidia’s top customers currently developing its own AI chips. Both companies are incorporating generative AI solutions into their respective cloud infrastructure service platforms to help businesses build applications and tailor their message(s) to consumers.

Apple is also developing its own AI infrastructure, with the company’s processors capable of running generative AI on MacBooks. For the moment, Apple’s AI ties are primarily an integration of its solutions, such as predictive text on the iPhone.

It’s pretty clear that the Israeli Englishman looks up quite a bit to Nvidia’s peers inside the Magnificent Seven.

Billionaire Jeff Yass added shares of time-tested AI businesses that will be AI-bubble-resistant.

The second-biggest billionaire seller of Nvidia stock during the fourth quarter was Susquehanna’s Jeff Yass. While Yass and his investment partners reduced their funds’ Nvidia stake by 27%, they were buying a trio of time-tested businesses with ties to artificial intelligence that could withstand the potential bursting of the AI ​​bubble. Must be able to, including:

  • Alibaba (NYSE: BABA): 5,297,854 shares were bought.

  • Tesla (NASDAQ: TSLA ): 527,008 shares were bought.

  • Microsoft (NASDAQ: MSFT ): 115,276 shares were bought.

As noted, the key point about these AI stocks is that if the AI ​​bubble bursts, their fundamentals will likely prevent them from getting caught up in a major downdraft. For example, Alibaba is China’s No. 1 e-commerce platform, with Taobao and Tmall accounting for nearly 51% of online retail sales combined. Alibaba Cloud is also #1 in market share in China (as of March 2023) and should continue to grow as enterprise cloud service spending is still in its infancy.

Tesla is North America’s largest electric vehicle (EV) manufacturer and the only pure-play EV manufacturer that is consistently profitable. While it incorporates AI solutions into its self-driving technology, the company’s success will ultimately be determined by its ability to sell or lease EVs. If history repeats itself and the AI ​​bubble bursts, Tesla’s operating results will ultimately determine where its share price is headed in the long term.

Meanwhile, Microsoft used cash from its legacy segments, such as Windows and Office, as well as its high-growth initiatives, including cloud infrastructure service platform Azure — the No. 2 cloud infrastructure service provider by spending worldwide. The one included. , behind only AWS. Although Microsoft is betting big on AI, more so than Alibaba or Tesla, it might be okay if AI expectations soften at some point in the not-too-distant future.

Billionaire Steven Cohen replaces Nvidia with increased AI infrastructure.

The last billionaire who was an aggressive seller of Nvidia stock during the quarter ended in December was Steven Cohen at Point72 Asset Management. While Cohen and his team were busy reducing Point72’s stake in AI infrastructure kingpin Nvidia by 66%, they were buying four sub-beneficiaries of the AI ​​movement, including:

  • Oracle (NYSE: ORCL): 2,178,533 shares were bought.

  • Western Digital (NASDAQ: WDC ): 971,494 shares were bought.

  • Dell Technologies (NYSE: DELL) 670,677 shares were bought.

  • Intuitive surgical (NASDAQ: ISRG ): 301,908 shares were bought.

As Jeff Yass did at Susquehanna, Point72’s investment team looks to de-risk the fund by focusing on businesses that could benefit from AI but have less direct exposure to when the bubble bursts. Is. While total sales for Oracle’s most recently reported quarter (ending February 29, 2024) were up just 7%, infrastructure-as-a-service sales jumped 49% from the prior-year period. While Oracle could easily lean on its old bread-and-butter segments if AI experiences a demand reset, it is well-positioned to be a long-term winner in AI infrastructure.

Western Digital is a potentially sneaky play on AI-powered storage. Just as Western Digital experienced a surge in demand during the initial wave of enterprise cloud service spending, growing storage needs in AI-accelerated data centers should be music to management’s ears. This could pave the way for the company’s high transfer rate NAND flash memory solutions to become standard in data centers.

To keep with the theme, Dell Technologies has its core computing segments to lean on if the AI ​​bubble materializes. Nevertheless, it has seen phenomenal demand for custom rack servers used by businesses running AI-accelerated data centers. While it makes up a small portion of Dell’s business right now, it positions the company to continue to benefit over the long term as AI solutions proliferate.

Cohen and his team also worked at Intuitive Surgical, a developer of robotic-assisted surgical systems. It’s a company that’s using AI to help surgeons study their procedure data to improve patient outcomes. Ultimately, the company should enjoy continued double-digit sales growth as the da Vinci surgical system contributes to a variety of soft tissue surgical indications. No other company comes close to the installed base of assisted surgical systems that Intuitive Surgical has had since the turn of the century.

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John Mackey, former CEO of Whole Foods Market, is a member of the board of directors of The Motley Fool, an Amazon subsidiary. Citigroup is an advertising partner of Motley Fool Company The Ascent. Suzanne Frey, an Alphabet executive, is a member of The Motley Fool’s board of directors. Sean Williams has held positions at Alphabet, Amazon, Intuitive Surgical, and Western Digital. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Intuitive Surgical, Microsoft, Nvidia, Oracle and Tesla. The Motley Fool recommends Alibaba Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a Disclosure Policy.

3 Billionaires Are Selling Artificial Intelligence (AI) Stock Nvidia and Buying These 10 AI Stocks Instead Originally published by The Motley Fool

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