We recently published a list of Billionaire Stanley Druckenmiller is Buying and Selling These 10 AI Stocks. Since NVIDIA Corp (NASDAQ:NVDA) ranks 5th on the list, it deserves a deeper look.
Stanley Druckenmiller is one of the few billionaires who have been bullish on the AI megatrends right from the start. But that doesn’t mean he’d buy just anything AI the market is buying. After making huge profits from his bullish bet on Jensen Huang’s AI chips empire, he started cashing out of the company in the first quarter and by the end of the June quarter, his stake in the company was left at just over 200,000 shares.
Back in May, Druckenmiller explained why he’s selling the hottest AI stock, saying he’s had a “hell of a run” and he now “just needs a break.”
However, the billionaire said at the time that AI remains underhyped in the long term. Stanley Druckenmiller compared the internet revolution with the current AI boom, saying AI could “rhythm” with the internet and the real payoffs will come 4-5 years from now on. The Duquesne Capital founder, who closed his fund for outside investors and turned it into a family officer in 2011, said that the “incremental payoff” of AI investments is coming by the “day.”
During the second quarter, Druckenmiller shook up his portfolio to buy and sell several famous as well as under-the-radar AI stocks. In this article, we will take a look at some of those.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Stan Druckenmiller
NVIDIA Corp (NASDAQ:NVDA)
Billionaire Stanley Druckenmiller’s Stake Value: $26,445,000 (-88% From the First Quarter)
Billionaire Druckenmiller cut his stake in NVDA by 88% in the second quarter.
Oppenheimer Asset Management recently gave a Buy rating to Nvidia (NASDAQ:NVDA).
“Key positives for NVDA remain the stock’s bullish trend, high-momentum score, and portfolio tailwinds from a relatively strong Technology sector. In terms of trading, NVDA has inflected positively above the bullish slope of its 200-day average indicating a resumption of the stock’s uptrend, in our view,” the firm said.
However, Aswath Damodaran, NYU Stern School of Business Professor of Finance, reiterated his NVIDIA Corp (NASDAQ:NVDA) thesis on a latest program on CNBC, calling the stock overvalued.
“NVIDIA Corp (NASDAQ:NVDA) is an amazing company, great growth, amazing cash flow, superb margins, but you are paying a premium price even given all of those pluses,” Damodaran said.
Asked what’d be a better buy than NVDA, Damodaran said AMZN is a better stock.
“Given the earnings and their cash flows if I had to buy a stock now and you forced me to a buy a big tech, I’d rather own Amazon I’d buy Amazon than buy Nvidia right now,” Damodaran added.
Aoris International Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“If Information Technology was the dominant sector for the quarter, NVIDIA Corporation (NASDAQ:NVDA), which is the largest supplier of microprocessors used for generative AI applications, was the dominant company. NVIDIA’s share price rose by a third in the quarter and has increased by 255% so far this year. Since the beginning of 2023, its market value has risen by 8.3x, or $4.3 trillion, making NVIDIA the third largest company in the world by this measure.
As a result of the unusually strong stock price performance from NVIDIA and a few other large companies, equity markets have become increasingly concentrated. You can see this in the chart below, which shows that on 30 June, 27% of the market value of the 500 largest US companies was attributable to just five companies, more than twice the average of the last 20 years.
The composition of the Aoris International Fund will always be very different to that of the broader equity market. There will be periods, such as the most recent quarter, where this contributes to our performance lagging that of our benchmark. When it comes to NVIDIA and other AI-centric companies, rapid growth is exciting, but it makes it difficult for us to judge what is normal. Our preference is to own established leading companies where we can make a more confident, evidence-based judgement about their growth and profitability.”
Overall, NVIDIA Corp (NASDAQ:NVDA) ranks 4th on Insider Monkey’s list titled Billionaire Stanley Druckenmiller is Buying and Selling These 10 AI Stocks. While we acknowledge the potential of NVIDIA Corp (NASDAQ:NVDA), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. This article is originally published at Insider Monkey.
