There are various ways to build a billion-dollar portfolio, which means that billionaires often have differing opinions on investment prospects. Despite the consensus that artificial intelligence (AI) holds significant potential, billionaire hedge fund managers may choose distinct routes to reap rewards from AI investments. For instance, while some might invest in Nvidia, others may decide to offload shares in the AI chip powerhouse.
Occasionally, however, prominent investors align in their approaches. This was evident in the fourth quarter of last year when billionaires David Tepper of Appaloosa Management and Michael Platt of Bluecrest Capital Management both sold their Nvidia shares and turned their attention to AI stocks that have surged 40,000% since they first debuted on the market. Let’s delve into the specifics.
Insight into 13F Filings
To understand the actions of these billionaires, it’s useful to know about 13F filings. Managers with stock holdings surpassing $100 million are required to disclose their trading activities to the Securities and Exchange Commission every quarter using Form 13F. These forms are accessible to the public, providing insight into the recent moves of these finance moguls.
Tepper and Platt, like many other wealthy investors, have invested in AI stocks. Yet, Tepper appears particularly proactive in this arena, with significant investments in Alibaba and Meta Platforms, both heavily involved in AI. In comparison, Platt has a larger concentration on financials and energy in his portfolio. During the latest quarter, both billionaires made similar moves:
- Tepper, overseeing $6.9 billion, trimmed his Nvidia holdings by 10%, now making up 4.6% of his portfolio, having held it since Q1 2023.
- Platt, managing $3.3 billion, drastically reduced his Nvidia stake by 96%, leaving it at a mere 0.2% of his portfolio; he has held the stock since Q2 of last year.
- Tepper has increased his position in Micron Technology, which surged 200% and now constitutes 6.2% of his portfolio, held since Q2 2023.
- Platt has initiated a small position in Micron, accounting for about 0.1% of his holdings.
Assessing Growth Opportunities
As is often the case with 13F filings, the precise motivations behind these shifts are unclear. Nevertheless, Tepper and Platt’s decisions might indicate a belief that Micron could present better growth potential as the AI sector evolves, possibly making it a more attractive option than Nvidia. Also noteworthy is that these trades were executed months ago, and their perspectives may have shifted since then.
Nonetheless, Micron, a leader in memory and storage for AI applications, shows promise for notable profit growth in upcoming quarters. As AI systems become better at tackling real-world challenges, Micron’s offerings could gain traction as essential tools in the next chapter of AI’s expansion. This process requires a lot of memory due to the inference or “thinking” capabilities needed to produce solutions.
Micron’s Strong Performance
In its latest reporting period, Micron showcased this trend with record revenue, and the company anticipates even more financial milestones in the next quarter—driven primarily by rising AI demand.
So, should you consider following Tepper and Platt’s lead by opting for Micron over Nvidia? It really comes down to your investment strategy and your existing holdings in AI stocks. If you’ve been invested in Nvidia for a while and are on the lookout for another high-potential option, Micron could be a good fit since it’s traded at just 11 times forward earnings, a much lower rate compared to many other AI shares, which often exceed 20 times.
That said, holding onto some Nvidia stock might still be wise, as the AI giant is likely to continue seeing substantial growth as the AI boom progresses.
