Cathie Wood’s Ark Invest sold the bulk of its Nvidia stake just before the company went on a massive rally.
Ark owned 1.3 million shares of Nvidia across all of its ETFs in early October, but that position has since dwindled to just 390,000 shares.
Wood said in February that Nvidia’s valuation was “very high” and that it was focused on higher conviction stocks.
Big-name investors are going all-in on AI
Some of the best-known names in investing are betting big on artificial intelligence stocks.
Bill Ackman recently revealed a $1 billion bet on Google parent Alphabet, while Stanley Druckenmiller pumped a combined $430 million into Microsoft and Nvidia.
Tiger Global founder Chase Coleman, billionaire trader Paul Tudor Jones, and Ark Invest CIO Cathie Wood are all bullish on AI.
Some of the biggest names in investing are piling into artificial intelligence, the theme that has taken markets by storm in 2023.
Billionaire investors including Bill Ackman, Stanley Druckenmiller and David Tepper are betting big on firms at the forefront of the AI race – such as Microsoft, Alphabet and chipmaker Nvidia.
Here’s how seven top players are responding to the AI trend:
1. Bill Ackman
Ackman’s hedge fund revealed Monday that it had plowed over $1 billion into Alphabet in a quarter where the tech giant significantly ramped up its AI efforts.
Pershing Square Capital Management snapped up more than 10 million shares in Google’s parent company – buying about 2.2 million Class A shares and 8.1 million Class C shares, according to a Securities and Exchange Commission filing.
Hedge fund billionaire Coleman said last month that mega-cap stocks like Amazon now look like a good bet again after a brutal 2022, thanks to the rise of AI.
The Tiger Global founder told investors to buy the so-called FAANG stocks – shorthand for Facebook parent Meta, Apple, Amazon, Netflix, and Alphabet – and cited Amazon sellers’ use of ChatGPT to write product listings as an example of how AI was already boosting Big Tech.
3. Stanley Druckenmiller
Druckenmiller loaded up on Nvidia shares and made a new investment in Microsoft last quarter, snapping up two of the best-performing stocks of 2023.
The billionaire investor’s Duquesne Family Office bought a $220 million stake in Nvidia and upped its Microsoft position by $210 million, according to its latest 13F filing, released Monday.
Nvidia, the world’s No. 1 producer of graphics chips needed for high-intensity AI computing, has seen its share price double this year. Microsoft, which was an early investor in OpenAI and has integrated ChatGPT technology into its search engine Bing, is up 30%.
4. Paul Tudor Jones
Large language AI models like ChatGPT will have a massive impact on both the economy and the stock market, according to billionaire investor Jones.
He said Monday that the tool had completely shifted his outlook on both inflation and equities – and he’s now bracing for an AI-fueled “productivity boom” that drags down soaring prices and pushes up stock valuations.
“The introduction of large language models [and] artificial intelligence is going to create a productivity boom that we’ve only seen a few times in the last 75 years,” Jones told CNBC.
5. Morgan Stanley
It’s not just individual investors who are caught up in the AI fanfare.
In a research note last month, Morgan Stanley said that 2023 would be a breakthrough year for the technology, which it believes represents a $6 trillion investment opportunity.
“We see AI accelerating digital transformation and tech diffusion across the economy,” internet analyst Brian Nowak said in the note.
6. David Tepper
Like Ackman and Druckenmiller, the owner of the NFL’s Carolina Panthers made some big bets on AI over the past quarter.
Tepper’s family office Appaloosa Management bought 150,000 Nvidia shares worth around $42 million and 500,000 shares in Cathie Wood’s ARK Innovation ETF, which specializes in investing in disruptive tech.
Wood’s fund plunged last year but is up just under 24% in 2023 thanks to tech stocks’ massive rebound.
7. Cathie Wood
The Ark Invest CIO has never been one to miss out on a disruptive technological trend – and she’s been heralding AI’s potential long before ChatGPT’s explosion in popularity earlier this year.
Cathie Wood’s Ark Invest is probably wishing it didn’t sell nearly 1 million shares of Nvidia between early October and today following the chipmaker’s massive year-to-date surge of more than 160%.
But the active investment manager, who has owned Nvidia on and off since the flagship fund’s inception in 2014, missed out on massive gains as it started to pare down its position in Nvidia heading into a 52-week low in mid-October.
Since Ark Invest’s first sale on October 5, when it held 1.3 million shares of Nvidia across all of its ETFs, the stock has soared 190% and added $620 billion to its market value. By late November, Nvidia owned just over 500,000 shares of the company.
Today, Ark Invest holds just 390,000 shares across its suite of next-generation technology ETFs. The stock is not in its flagship Disruptive Innovation fund.
Rough calculations by Insider suggest Ark Invest left more than $200 million in potential profits on the table when it sold down its Nvidia stake throughout the end of last year.
Ark’s ill-timed share sale of Nvidia highlights the difficulties of actively managing a portfolio of disruption-focused investments, because even if you pick the right theme to invest in, there’s no guarantee you’ll pick the right companies to bet on.
In February, Wood said Ark’s wave of Nvidia sales was in part because its valuation was “very high” and that it was consolidating its portfolio into higher conviction names.
“We like Nvidia, we think it’s going to be a good stock. It’s priced, it’s the ‘check-the-box’ AI company. For a flagship fund, where we’re consolidated towards our highest conviction names, part of that has to do with the valuation,” she told CNBC on February 27.
Wood is instead counting on UiPath for Ark Invest’s exposure to artificial intelligence, which is its second largest position across all of its ETFs. Meanwhile, Tesla remains Ark Invest’s top holding, which is also working on artificial intelligence to help enable its self-driving technology.
But despite the hype in AI this year, those two stocks have only captured some of the year-to-date gains seen across the space. Shares of UIPath are up just 14% year-to-date, while Tesla stock is up an impressive 50%.
Shares of Ark Invest’s Disruptive Innovation ETF were down 2.7% on Thursday, despite the Nasdaq 100 jumping 1.7%.
