It's no secret that artificial intelligence (AI) is the hottest game for investors. Much of the stock market's significant rise in 2023 and his 2024 was driven by the growing interest in AI in all things.
No company is more at the forefront of the AI boom. Nvidia (NASDAQ:NVDA). The company's stock price soared 239% last year and is up nearly 75% this year. But is enthusiasm for Nvidia starting to wane? It might be. Two billionaire investors are selling his Nvidia and buying another AI stock instead.
Thank you Nvidia
David Tepper is known to many as the owner of the Carolina Panthers. But he found great success with the hedge fund he founded in 1993, Appaloosa Management, and amassed enough money to buy an NFL franchise. Currently, Tepper's net worth is his $20.6 billion.
Tepper is bullish on AI. Eight of the top 10 stocks in Appaloosa's portfolio are AI stocks. Nvidia ranks No. 4 among hedge funds, but Tepper seems to think the stock's incredible run may be coming to an end. He sold nearly 23% of his stake in graphics processing unit (GPU) maker Appaloosa in the fourth quarter of 2023.
He's not the only billionaire investor with significantly less interest in NVIDIA right now. Chase Coleman first made a name for himself in the investment world by working with legendary hedge fund manager Julian Robertson. Coleman then ran his own hedge fund, Tiger Global Management, which later expanded into venture capital. His net worth is currently $5.7 billion.
Tiger Global Management reduced its position in Nvidia by nearly 13% in the fourth quarter. Nvidia still claims the No. 10 spot in hedge fund portfolios, with shares worth around $480 million at the end of 2023. However, after making huge profits, Mr. Coleman is taking some of his profits back into stocks.
thank you amazon
Both Tepper and Coleman were saws. Amazon (NASDAQ:AMZN) AI stocks to buy in the fourth quarter. Tepper's Appaloosa Fund has increased its position in the e-commerce and cloud services giant by more than 5%. Coleman's Tiger Global Management has increased its stake in Amazon by 24%.
Why are these two billionaire investors more bullish on Amazon than Nvidia? Tepper and Coleman say Nvidia's valuation is currently high and any sign of trouble could cause it to plummet. I think they think that it is at a certain level. At the same time, Amazon appears to be building sustainable momentum.
AI is undoubtedly a key growth driver for Amazon. The company's cloud platform, Amazon Web Services (AWS), is the leading cloud service provider by market share. AWS is investing particularly heavily in supporting generative AI development.
Amazon also uses generative AI internally. CEO Andy Jassy said on the company's fourth quarter earnings call.[W]you believe it [generative AI] It will ultimately generate tens of billions of dollars in revenue for Amazon over the next few years. ”
Of course, Amazon is more than just an AI stock. The company's efforts to improve the profitability of its e-commerce business continue to bear fruit. Amazon has improved its operating margin for seven consecutive quarters in its North American business unit.
It also plays an important role in the digital advertising market. Amazon's ad revenue increased 26% year-over-year in the fourth quarter. And that growth came before the company started advertising on Prime Video.
For Tepper and Coleman, buying more Amazon stock is already paying off. The stock price has increased more than 20% since the beginning of the year.
Should I buy it on Amazon?
Investors shouldn't sell Nvidia and buy Amazon just because two hedge fund billionaires did. However, it's not a bad idea to consider the potential reasons behind Tepper and Coleman's moves.
I think the reasons why Tepper and Coleman added Amazon stock in the fourth quarter still apply. The company's profits are likely to continue increasing. AI and advertising continue to be strong growth drivers. In my opinion, Amazon is still a good long-term option.
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Keith Speights has a position at Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.
Two billionaire investors are selling Nvidia and buying this artificial intelligence (AI) stock instead Originally published by The Motley Fool
