Stanley Durkin Miller is one of the most successful investors of all time.
Working under George Soros, Durkin Miller helped lead the strategy that “broke the Bank of England”, devaluing the British pound to over a billion dollars in 1992, leading to It crashed.
However, that trade was not a fluke. After starting Duquesne Capital Management in 1981, Druckenmiller’s hedge fund never had a down year, a period that included the Black Monday crash, the dot-com bust, and the Great Financial Crisis. Duquesne Capital Management averaged 30% annual returns from 1986 to 2010, crushing the broader market.
Durkin Miller closed his fund in 2010, but he didn’t stop investing. Today, he runs the Duquesne Family Office, which has assets of about $3.4 billion as of its fourth-quarter update. Lately, the famous investor has been a clear bull on AI stocks. Like many other CEOs and investors, the billionaire sees it as a major innovation, saying last year, “AI could be as transformative as the Internet.”
Not surprisingly, AI stocks make up a large portion of his portfolio. In fact, just three AI stocks make up 40% of its holdings. Let’s take a look at these stocks and see if any are worth buying today.
Image source: Getty Images.
1. Nvidia
This may not be surprising. Nvidia (NVDA -0.12%) At the top of this list. Nvidia has dominated the AI narrative, and has been the biggest winner in terms of market cap since the start of 2023, at more than $1.5 trillion.
At the end of 2023, Druckenmiller owned 617,494 shares worth about $306 million and call options on stock worth another $242 million. Combined, those holdings make up 16% of its portfolio. Considering that Nvidia has rallied since the start of the year, these options could have paid off well for the billionaire investor.
Druckenmiller began buying Nvidia in the fourth quarter of 2022, indicating that the stock jumped after ChatGPT launched, signaling the start of the AI boom. Investors said in the fall that Nvidia’s stock was in “nosebleed territory,” but shares have continued to rise, and its call purchases in Q4 indicate that it’s up to that conclusion. changed, even though it reduced its stake in Nvidia stock by 30%. It’s unclear in Q4 whether he sold any of his Nvidia stock in Q1 so far, but based on its current price, the right move would have been to hold on.
2. Microsoft
After Nvidia, Microsoft (MSFT -2.07%) May be the next most popular AI stock. The tech giant has been a close partner of ChatGPT parent OpenAI, which has invested billions in AI startups, making it a leader in the new technology. It has incorporated OpenAI features into all of its products, including Azure, GitHub, Bing, and its Office suite, and designed its ChatGPT-like Copilot to answer questions, improve communication, and guide users.
Druckenmiller is not new to Microsoft. He first started buying the stock in 2015, and he increased his stake in Q4, buying 68,860 shares to bring the total to 1.09 million, or $408.4 million. Microsoft is its largest stockholding and accounts for 12% of its portfolio.
Notably, in Q4, Druckenmiller made its full contribution. the alphabetA competitor of Microsoft, indicates 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. Kupang
South Korean e-commerce leader Kupang (CPNG -2.05%) May not be an AI stock in the traditional sense, but the company is doing things with artificial intelligence that puts it in the category.
Coupang uses artificial intelligence in a variety of ways, including robots in its fulfillment center that can lift more than 2,000 pounds and are called autonomously guided vehicles as they direct themselves around the warehouse. . They have reduced the human workload by about 65%.
Coupang also uses AI to help warehouse workers, giving each employee a personal digital assistant (PDA) that will assign tasks and optimize routes using AI and machine learning.
Druckenmiller owned 22.9 million shares of Coupang at the end of the year, adding 2 million shares to his holdings in Q4, bringing the total stake to $371 million, or 11% of his portfolio. Owns the Korean e-commerce stock even before it goes public. It’s not entirely clear why Druckenmiller is betting on Coupang, but the stock currently offers attractive growth at a good price.
Which of these AI stocks to buy?
Of these three stocks, I think Nvidia and Microsoft look like solid buys. Yes, the shares have risen considerably over the past year, but these companies are the relative leaders in their respective segments of AI (Nvidia in hardware and Microsoft in software), and those leadership positions are likely to pay off in the coming years. .
Coupang also looks promising but risky. The company is delivering solid growth and trading at a reasonable valuation. However, its long-term growth seems to depend on expanding outside of South Korea and into new markets, as it has already penetrated its home market heavily. It could pay off for the company, especially as “evolving offerings” drove revenue 105% to $273 million in Q4, but it’s a risky strategy.
Overall, investors are better off sticking with Nvidia and Microsoft here. If you’re an AI investor, it makes sense to follow Druckenmiller’s comments and the investment landscape as it evolves. The billionaire called the Nvidia rally, and he may have some foresight about where the AI boom is headed.