Anika Begay
Major hedge funds have dumped some of the biggest names in AI for 2024 ahead of the third-quarter sell-off, according to regulatory filings. The filings released this week showed a slew of billionaire investors selling stakes in Nvidia, Alphabet and Meta Platforms, among other major contributors to this year’s market gains. The sell-off came ahead of a volatile period for Wall Street’s beloved AI trade, as investors took profits on some of the winning names for 2024. Last week’s close of the yen’s “carry trade,” coupled with a weak July jobs report, spurred recession concerns and contributed to some of the weakness. Alphabet, Microsoft and Amazon have all tumbled since the start of the third quarter. NVDA YTD mountain Nvidia, YTD Some big investors haven’t been shy about flagging concerns that the AI trade is overvalued in the near term. Duquesne Family Office’s Stanley Druckenmiller told Vscek in May that he sold part of his Nvidia stake in March, when “the stock went from $150 to $900.” Filings show the billionaire investor reduced his position by about 88% in the second quarter, to $26.4 million. Appaloosa was another major Nvidia beneficiary during the period. The hedge fund led by David Tepper reduced its stake in the AI chipmaker by 84%, bringing its position to about $85 million. Soros Capital unwound its bet. Alphabet also suffered a major hedge fund sell-off last quarter. Daniel Sundheim’s D1 Capital exited a $400 million position in the search giant and a $382 million position in Meta Platforms. Both stocks had been among the fund’s top holdings in the first quarter. Loeb, Tepper and Bill Ackman’s Pershing Square also trimmed Alphabet positions, while Baupost’s Seth Klarman trimmed his stake by 64%. GOOGL YTD mountain Alphabet, YTD Hedge funds also trimmed positions in other leading megacap names, including Amazon, Microsoft and Apple. In addition to Nvidia and Alphabet, Appaloosa trimmed positions in Amazon, Microsoft, Meta Platforms and Advanced Micro Devices. Druckenmiller trimmed its stakes in software giant Microsoft and Apple by 64% and 79%, respectively. Earlier this month, Warren Buffett’s Berkshire Hathaway disclosed that it had sold nearly half its stake in the iPhone maker. Loeb’s Third Point trimmed its positions in Meta Platforms and Microsoft by 11% each. To be sure, some big investors have been adding to major tech stocks. Loeb made a new $411 million bet on Apple, while holding on to a stake in Amazon worth $986 million. It also increased its position in Taiwan Semiconductor Manufacturing by 72%. Both Jeff Smith of Starboard Value and Mason Morfit’s ValueAct Capital Management increased bets on Salesforce, while Andreas Halvorsen’s Viking Global put more money into Apple, Amazon, and Microsoft. The filings are from the end of the second quarter, so it’s also possible that some major investors bought back during the latest dip. Nvidia shares are up nearly 20% in the previous week, but are still down more than 11% from their record high.
