2 Billionaires Are Selling Nvidia and Buying AI Stock

AI is certainly the hottest topic for investors. Interest in everything AI drove significant stock market gains in 2023 and 2024. Nvidia has led the AI boom like no other firm. The chipmaker's share price rose 239% last year and 75% this year. But is Nvidia losing steam? Maybe. Two billionaires sold Nvidia and bought another AI stock.  

No thanks, Nvidia. Carolina Panthers owner David Tepper is well-known. Through his 1993 hedge firm, Appaloosa Management, he made enough money to buy the NFL team. Today, Tepper is worth $20.6 billion. Tepper believes in AI. Eight of Appaloosa's top 10 holdings are AI stocks. Tepper's fourth-largest holding is Nvidia, but he thinks the stock's upswing may be ending. He sold over 23% of Appaloosa's GPU share in Q4 2023.  

He's hardly the only billionaire investor losing interest in Nvidia. Chase Coleman began his investment career with Julian Robertson, a hedge fund icon. Coleman founded Tiger Global Management, a hedge fund that later ventured into venture financing. His net worth is $5.7 billion.  

In Q4, Tiger Global Management sold approximately 13% of Nvidia. At the end of 2023, the hedge fund's No. 10 holding was Nvidia, worth $480 million. After large increases, Coleman is selling the shares to take some profits.  

Applause for Amazon Tepper and Coleman think Amazon (NASDAQ: AMZN) is a better AI stock for Q4. Tepper's Appaloosa fund bought more than 5% of the e-commerce and cloud-services behemoth. Coleman's Tiger Global Management bought 24% more Amazon.  

Why are these two billionaires more optimistic about Amazon than Nvidia? Tepper and Coleman may think Nvidia's value is high enough to precipitate a sharp sell-off at any sign of difficulty. Meanwhile, Amazon appears to be gaining steam. Amazon's growth relies on AI. Amazon Web Services (AWS) dominates the cloud-services business. AWS prioritizes generative AI development.  

Amazon uses generative AI internally. In Amazon's Q4 earnings conference call, CEO Andy Jassy remarked, "[W]e believe it [generative AI] will ultimately drive tens of billions of dollars of revenue for Amazon over the next several years." Amazon is more than an AI stock. The company's e-commerce profitability efforts are paying off. Amazon's North America operating margins have increased for seven quarters.  

Also a major player in digital advertising. Q4 Amazon advertising income rose 26% year-over-year. Before Prime Video advertisements, the company grew. Tepper and Coleman profited from buying more Amazon shares. Shares are risen nearly 20% year-to-date.  

Should you acquire Amazon? Investors shouldn't sell Nvidia and buy Amazon because two hedge fund millionaires did. However, it's worth investigating Tepper and Coleman's motives. I believe Tepper and Coleman's Q4 Amazon stock purchases are still relevant. Profits should rise for the company. AI and advertising boost growth. I think Amazon is a good long-term investment.  

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