Artificial intelligence chip designer Nvidia has been popular with billionaires in recent years, with its inventory surged by over 1,000%.
Now, some of these billionaires are turning to another company that has invested heavily in AI.
10 stocks I like more than meta platform›
nvidia(NASDAQ: NVDA) It's an easy choice for investors looking to win in the AI (AI) market. Stocks have skyrocketed 1,500% over the past five years as the AI chip leader provided a quarter after a record-breaking revenue growth quarter. Nvidia's market advantage and innovation should help you make money as the AI boom continues.
However, some billionaires have decided to sell some or all of Nvidia's shares and focus on other potential AI winners. For example, Stanley Druckenmiller of the Duquesne Family Office sold all of Nvidia's stake in the third quarter of last year. Just recently, Appaloosa's David Tepper and Court Management's Philip Ruffont have cut their positions at Nvidia.
As some investors reduce their exposure to top chip makers, another AI stock, which has reached nearly 300% over the past three years, has emerged as investors' favorites. Let's check it out.
Image source: Getty Images.
The stocks I'm talking about are one of Tepper's top five shareholdings, the number one share in Laffont, and Stephen Mandel Jr. of Tiger Global Management, associates Chase Coleman and Lone Pine Capital. Viking global investor Ole Andreas Halvorsen is also bullish on the stock and will open his position in the first quarter of this year.
This player, which has been highly sought after by billionaires recently, is Meta Platform(NASDAQ: Meta)a company you are very familiar with, perhaps thanks to its social media advantage. Meta owns Facebook, Messenger, Instagram and WhatsApp. Over 3.4 billion people worldwide use at least one of these apps every day.
Here's how billionaire Tepper, who oversees $8.3 billion, and Laffont, who manages $22 billion, took action against Nvidia and Meta in the first quarter:
Tepper has sold 55% of his Nvidia stake and currently holds 300,000 shares. He increased his Meta status by 12% to 550,000 shares. It's his fifth largest share.
Laffont reduced Nvidia's position from 14% to 8,545,835 shares. He raised Meta's position from 1.9% from 3,757,611 shares. As mentioned above, Meta is the biggest position in his portfolio.
Given these moves and the top spot in the meta in the portfolio of other billionaires, it is clear that these expert investors see them as potential winners of the AI revolution. Given that Meta is best known for its strengths in the social media industry, you may wonder why this applies. Well, Meta is also building AI expertise in the form of Llama, a unique leading language model (LLM), to promote power innovation and therefore revenue growth that could ensure leadership in social media.
This is how it works. Meta generates a large portion of revenue from advertisers across social media apps. Also, through tools like AI assistants, Meta aims to continue to spend more time on apps, encouraging advertisers to invest more in ads to reach us. Today's offering, Meta AI is currently the most widely used AI assistant in the world.
In addition to this, innovation in the AI meta could lead to other products and services that increase future revenue. Meta is clearly believes the proverb “go big or go home” as it expects to reach capital expenditures of as much as $72 billion this year to support AI ambitions.
Now, the problem is: Do you need to follow a billionaire and buy Meta shares? The stock trades earnings estimates before 27x, making it more expensive than it was months before the expected revenue fell below 20x. However, this remains a reasonable valuation of growth stocks, particularly profitable, established players offering a safe revenue stream and dividend payments.
The next question is, should we prefer meta over Nvidia in the AI boom? Investors, such as certain billionaires, who have already won over time over NVIDIA investments, could turn from stocks to meta. With AI investments strengthened, Meta could be well positioned to bring profits in the coming quarters. Meta is also slightly cheaper than Nvidia, and today trades 33 times the estimate of advance revenue.
So, if you don't have meta stocks yet, you might want to join this exciting story, but you don't necessarily have to forget about Nvidia. The best strategy is to hold both stocks in these AI leaders as the AI boom enters the next chapter.
Consider this before purchasing inventory on the Meta Platform.
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Randi Zuckerberg, a former director of market development, Facebook spokeswoman and sister to Metaplatform CEO Mark Zuckerberg, is a member of Motley Fool's board of directors. Adria Cimino has no position in any of the stocks mentioned. Motley Fool recommends a meta platform and Nvidia. Motley Fools have a disclosure policy.
The billionaire has sold Nvidia and has betted on the AI stock, which has risen nearly 300% over the past three years.
