Since the advent of the Internet in the mid-1990s, investors have always found a new innovation, technology, or trend that catches their attention. However, no market has emerged more targetable since the advent of the Internet than the current surge in stock prices. artificial intelligence.
What makes AI so special is the ability of programs and systems to learn and evolve over time without human intervention. This means that programs and systems powered by AI can become more efficient at the tasks they are assigned, as well as grow to learn new skills. On paper, this gives AI a benefit in almost every sector and industry around the world.
The massive market for artificial intelligence—estimated to be worth $15.7 trillion to the global economy by 2030, according to analysts at PricewaterhouseCoopers—is no secret to Wall Street’s big investors. Yet quarterly Form 13F filings with the Securities and Exchange Commission show that billionaire money managers have mixed feelings about the hottest AI stocks.
In the quarter ended June, more than a half-dozen billionaire investors were active sellers of the “brains” behind AI-accelerated data centers. But interestingly, several billionaire asset managers were also enthusiastic buyers of two other major AI players that announced or completed stock splits this year.
Data center hardware leaders Nvidia and AMD are showing up at the door.
Despite the growing demand from enterprises for GPUs that power generative AI solutions, train large language models, and oversee split-second decision-making for AI-based software and systems, It was off the charts.And the billionaires weren’t afraid to call the record and cash in on two of the most prominent AI-GPU developers: Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD).
The quarter ended in June was the third straight quarter in which more than a half-dozen billionaires sold Nvidia stock. Among the seven known sellers in the last quarter (total shares sold in parentheses):
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Ken Griffin of Citadel Advisors (9,282,018 shares)
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David Tepper of Appaloosa (3,730,000 shares)
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Stanley Druckenmiller of Duquesne Family Office (1,545,370 shares)
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Cliff Asness of AQR Capital Management (1,360,215 shares)
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Israel Englander of Millennium Management (676,242 shares)
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Steven Cohen of Point72 Asset Management (409,042 shares)
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Philippe Lafont of Coatue Management (96,963 shares)
Thanks to a combination of fate and coincidence, AMD also had seven billionaire money managers send its shares to the chopping block in the second quarter (total shares sold in parentheses):
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Ken Fisher of Fisher Asset Management (5,716,366 shares)
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Ole Andreas Halvorsen of Viking Global Investors (3,952,088 shares)
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Ken Griffin of Citadel Advisors (2,649,937 shares)
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Israel Englander of Millennium Management (977,904 posts)
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Jeff Yass of Susquehanna International (536,689 shares)
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Philippe Lafont of Coatue Management (502,688 shares)
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David Tepper of Appaloosa (260,000 shares)
While profit taking is certainly one reason we’ve seen notable billionaire sell-offs in Nvidia and AMD, historical precedent may be a bigger motivator.
Over the past thirty years, many unmissable technologies, innovations, and trends have come and gone, and none have escaped the onset of a bubble. Investors tend to be watchful and expectant about the huge potential of game-changing technologies, almost always ignoring the fact that it takes a long time for new innovations to mature and be adopted by consumers and/or businesses.
The simple fact that most companies lack a clear business plan for their AI investments is a clear indication that the AI euphoria may have outpaced the technology’s current usefulness.
Competitive pressures are another reason billionaire investors may be pulling out of the market with Nvidia and AMD. Nvidia can’t keep up with enterprise demand for its H100 GPU and is likely to lose valuable data center “real estate” as its first four customers (all members of the “Magnificent Seven”) develop AI-GPUs in-house. While AMD could erode Nvidia’s monopoly on AI-GPU market share with its much cheaper MI300X AI-GPU, the end result of both companies’ increased production is a decrease in the scarcity of AI-GPUs and, over time, a weakening of pricing power.
Although the billionaires were heavy sellers of the brains behind high-end data centers, they were clear buyers of two other AI stocks that split.
More than half a dozen billionaires are gathering at Broadcom
While prominent billionaires were busy dumping Nvidia and AMD shares during the second quarter, there was a pile-up in AI-focused networking solutions Broadcom (NASDAQ: AVGO)which completed a 10-for-1 stock split in July. And to keep things somewhat on topic, a total of seven billionaire investors were buyers of Broadcom stock, including (total shares purchased in parentheses):
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Ole Andreas Halvorsen of Viking Global Investors (2,930,970 shares)
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Jeff Yass of Susquehanna International (2,347,500 shares)
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Israel Englander of Millennium Management (2,096,440 shares)
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Ken Griffin of Citadel Advisors (1,880,740 shares)
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David Siegel and John Overdeck of Two Sigma Investments (1,332,230 shares)
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Ken Fisher of Fisher Asset Management (865,090 shares)
Broadcom made its big entry into AI with the launch of the Jericho3-AI architecture in April 2023. Jericho3 has the ability to connect up to 32,000 GPUs, aiming to reduce latency and help companies maximize the computing power of their GPUs.
But despite Broadcom’s apparent AI boost, billionaires may be more impressed by its diversified operations. For example, the company is a leading provider of wireless chips and accessories used in next-generation smartphones. And as telecoms continue to expand their 5G networks, demand for Broadcom’s smartphone solutions has surged.
Broadcom has also relied on acquisitions as a way to expand its ecosystem of products and services and increase cross-selling opportunities. These include buying IT management software and solutions company CA Technologies, cybersecurity company Symantec, and paying $69 billion to buy cloud-based virtualization software company VMware. The latter will help Broadcom address the cloud needs of private and hybrid businesses.
Having real revenue diversification means that Broadcom will likely do better than Nvidia and AMD if the AI bubble bursts, as history suggests it will.
Six Billionaire Money Managers Bought Super Micro Computer Shares
Another AI stock that split and had billionaires buying shares in the June quarter was server and storage solutions provider supercomputer (NASDAQ: SMCI)Six billionaires have opened a position or added to their existing stakes in Super Micro, including (total shares purchased in parentheses):
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Israel Englander of Millennium Management (553,323 posts)
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Jeff Yass of Susquehanna International (508,814 shares)
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Ken Griffin of Citadel Advisors (98,752 shares)
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Steven Cohen of Point72 Asset Management (45,066 shares)
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Ray Dalio of Bridgewater Associates (15,777 shares)
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Cliff Asness of AQR Capital Management (1,040 shares)
On August 6, when Super Micro unveiled its fourth-quarter operating results, its board of directors announced approval of a 10-for-1 stock split, which will take effect after the close of trading on September 30.
While investors have been focusing a lot on the GPUs that make AI-powered software and systems work, Super Micro Computer is reminding Wall Street how important AI infrastructure is to enterprise data centers. The company’s customizable rack servers, which include Nvidia’s flagship H100 GPU, have been in hot demand, as evidenced by the 110% sales growth Super Micro reported in fiscal 2024 (which ended June 30). The midpoint of Super Micro’s sales guidance — $28 billion — for fiscal 2025 suggests triple-digit annual sales growth.
The downside to Super Micro Computer is that it is closely tied to Nvidia’s fortunes. Supply constraints have made it impossible for Nvidia to meet all of its customers’ demands, meaning Super Micro may not reach its potential.
Moreover, we’ve been there before with Super Micro. A company that was a huge success during the enterprise cloud computing boom, but failed to live up to Wall Street’s high expectations shortly after. If AI takes some time to mature as a technology, Super Micro’s stock could give up most of its gains.
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Sean Williams The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has Disclosure Policy.
Step aside, Nvidia and Advanced Micro Devices: Billionaires are selling them and instead acquiring shares in two split AI companies Originally posted by The Motley Fool