Nvidia (NASDAQ: NVDA) has been one of the best-performing stocks of the past few years, adding literally trillions of dollars of value to its shareholders’ portfolios. Several big hedge fund managers were among the investors who made big money by investing early in Nvidia. But now they’re starting to take their chips off the table and place bets on some other incredible artificial intelligence (AI) stocks.
Some of the hedge fund managers selling investments in Nvidia include:
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Stanley Druckenmiller: Sold 71% (441,551) of his family office’s shares and 100% (4,895) of his call options on Nvidia.
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Israel Englander: Sold 35% (720,004) of Millennium Management shares and 31% (6,910) of call options. He has a heavy position in Nvidia put options, which give him the right to sell the shares at a certain price.
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Chris Rokos: Sold 41% (105,453) of his hedge fund’s shares.
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Philippe Laffont: sold 68% (2,937,060) of the shares of Coatue Management.
There are many more examples of large institutional selling. After the meteoric rise in Nvidia’s stock price, it makes sense that they would at least reduce their stake. Average investors, however, should be more interested in what large hedge fund managers are buying.
Here Are Two Fantastic AI Stocks Billionaires Are Buying While Selling Nvidia
1.Microsoft
Microsoft (NASDAQ: MSFT) shot to the forefront of the AI ​​space when it added $10 billion to its investment in generative AI leader OpenAI in early 2023. Despite its position as one of the most valuable companies in the world before the AI ​​boom, artificial intelligence is proving to be a substantial growth area for the tech company.
Several billionaire fund managers saw an opportunity to buy more Microsoft shares in the first quarter, including:
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Ole Andreas Halvorsen: bought 1,596,887 shares, restoring his position in the stocks for his Viking Global Investors fund.
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Steven Cohen: Bought 566,749 shares, more than double Point72’s stake in the stock. He also sold options positions, including 1,844 put options.
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Chris Rokos: Bought 274,232 shares, increasing his hedge fund’s stake by 172% from the fourth quarter.
Microsoft’s flagship AI product is Azure AI, which provides cloud solutions for AI developers who want to use existing base models to implement new AI-driven software solutions. The company grew the number of Azure AI customers by 60% year-over-year, and average spend per customer is also growing.
Microsoft is investing heavily in expanding its data center capacity. But management said it will take some time to get everything online. As a result, it expects Azure revenue to accelerate in the second half of fiscal 2025. That’s a big achievement considering it’s already the fastest-growing hyperscale cloud provider.
Microsoft also offers its own AI assistants in its enterprise software portfolio, called Copilot. Adoption is growing rapidly, with a 60% increase per quarter. With over 400 million commercial Office 365 seats, there’s a long road ahead for the product.
The stock is currently trading at around 30 times expected earnings. While that is a significant premium to the S&P 500the stock seems well worth the price. Its leadership in enterprise software solutions and AI development should ensure years of outsized growth.
2. Meta-platforms
Meta platforms (NASDAQ: META) has long been at the forefront of AI development. Machine learning algorithms form the backbone of Facebook and Instagram’s content feeds, along with the emerging Threads, which recently surpassed 200 million monthly active users.
Recently, it has turned its attention to generative AI, developing and open-sourcing the Llama family of base models that power its Meta AI feature in Instagram and Facebook, as well as many other behind-the-scenes features. CEO Mark Zuckerberg has ambitions to transform Meta into “the world’s leading AI company.”
Billionaires are buying Zuckerberg’s vision and pouring their money into the stock. Some notable purchases in the first quarter include:
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Chris Rokos: Bought 377,551 shares, reopening his hedge fund’s first position since 2022.
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Ray Dalio: added 327,992 shares, increasing Bridgewater Associates’ stake by 49%.
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Stanley Druckenmiller: bought 63,930 shares, renewing a position.
While Meta already uses AI across its family of content recommendation apps, it’s starting to integrate it into its advertising services. Zuckerberg said he sees a day when “advertisers can basically just tell us the objective and the budget of a business, and we’ll do the rest for them,” during Meta’s second-quarter earnings call. He also sees Meta facilitating the creation of AI service agents for businesses, opening the door to more opportunities to monetize business messaging.
All things considered, AI will have a significant impact on Meta’s continued revenue growth. Higher engagement combined with lower barriers to ad creation and targeting, and improved algorithms needed to target those ads as accurately as possible, should all result in strong revenue and profit growth for the social media company. Meanwhile, its hardware business, which includes Oculus VR headsets and Ray-Ban sunglasses, is showing strong growth that’s being bolstered by AI features.
Meta shares currently trade at around 23 times forward earnings, which is significantly lower than most AI stocks. That’s despite the fact that Meta continues to grow earnings steadily in the mid-to-high double digits, giving it a very attractive PEG ratio. The continued investment in AI should ultimately yield strong returns for the company and its shareholders.
Should You Invest $1,000 in Nvidia Now?
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Randi Zuckerberg, former chief marketer and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adam Levy has positions in Meta Platforms and Microsoft. The Motley Fool has positions in and recommends Meta Platforms, Microsoft and Nvidia. The Motley Fool recommends the following options: long Jan 2026 $395 calls on Microsoft and short Jan 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Billionaires Are Selling Nvidia and Buying These 2 Fantastic Artificial Intelligence (AI) Stocks Instead was originally published by The Motley Fool
