Form 13Fs, the quarterly release of financial information filed with the Securities and Exchange Commission (SEC), are eagerly awaited by investors. These reports provide a snapshot of the stocks that top money managers on Wall Street have bought and sold in the previous quarter. They offer valuable insights into the stocks, industries, and trends that are catching the attention of the brightest asset managers.
One trend that has generated significant interest among investors is the field of artificial intelligence (AI). AI involves the use of software and systems to handle tasks traditionally performed by humans. It has the potential to add trillions of dollars to the global gross domestic product by 2030. With such promising prospects, it’s no wonder that investors are closely watching what Wall Street’s top money managers are doing with AI stocks.
Based on the latest 13F filings, it appears that billionaire investors have been reducing their stakes in two popular AI stocks while increasing their investments in another well-known AI-inspired company.
The first AI stock that prominent billionaires have been selling is Nvidia (NASDAQ: NVDA), the semiconductor giant that serves as the infrastructure backbone of the AI movement. During the fourth quarter of last year, eight billionaires reduced their stakes in Nvidia. The reasons behind this sell-off include increasing competition and the potential for margin cannibalization. While Nvidia currently dominates AI-accelerated data centers, other companies like Advanced Micro Devices and Intel are ramping up their own offerings, posing a threat to Nvidia’s market share. Additionally, internal competition from major customers like Microsoft and Meta Platforms is also a concern for Nvidia.
Another popular AI stock that billionaires have been dumping is Microsoft. Despite the company’s investments in AI and development of its own AI chips, seven billionaire investors reduced their holdings in Microsoft during the last quarter. The reason behind these sell-offs could be a combination of skepticism about the early adoption of AI and the company’s valuation. Microsoft currently trades at a relatively high multiple compared to its forward-year earnings, which may have deterred some investors.
On the other hand, Amazon (NASDAQ: AMZN) has been attracting billionaire investors. Eight billionaires increased their positions in the e-commerce giant during the fourth quarter. Amazon utilizes generative AI to enhance voice interactions with its virtual assistant Alexa and improve its advertising services. However, investors may also be drawn to Amazon’s other rapidly growing segments, including Amazon Web Services (AWS), its cloud-infrastructure service. AWS is a major cash flow generator for Amazon, with higher margins compared to its e-commerce segment. Furthermore, Amazon’s valuation based on cash flow is historically cheap, making it an attractive investment opportunity.
In conclusion, while billionaire investors have been decreasing their stakes in certain AI stocks like Nvidia and Microsoft, they have been increasing their positions in companies like Amazon. These investment decisions reflect the competition and margin concerns facing certain AI stocks, while also highlighting the potential growth and attractive valuation of others. Investors would do well to consider these trends when evaluating their own portfolios.
