Recent regulatory filings have revealed that major hedge funds are ditching some of the leading artificial intelligence names of 2024. This move comes ahead of a third-quarter sell-off, which saw a slew of billionaire investors selling off stakes in companies like Nvidia, Alphabet, and Meta Platforms. These companies were key contributors to this year’s market gains, but investors seem to be taking profits amidst a volatile period for the AI trade.
Some big investors have expressed concerns about the overhyped short-term AI trade. For example, Stanley Druckenmiller of Duquesne Family Office mentioned in May that he had sold off some of his Nvidia stake in March when the stock soared from $150 to $900. Securities filings show that he reduced his position by about 88% in the second quarter. Similarly, other hedge funds like Appaloosa and Soros Capital have also liquidated their bets on Nvidia, signaling a cautious approach towards the AI market.
Apart from Nvidia, hedge funds have also reduced positions in other leading megacap names like Alphabet, Amazon, Microsoft, and Apple. Companies like Alphabet and Meta Platforms saw heavy selling from funds like D1 Capital and Pershing Square, indicating a shift in sentiment towards these tech giants. Even Warren Buffett’s Berkshire Hathaway sold nearly half of its stake in Apple, showcasing a lack of confidence in the tech sector amongst some major investors.
Despite the sell-off, some big investors have taken contrarian bets on major technology trades. For example, Loeb made a fresh $411-million bet on Apple and increased his stake in Amazon. Starboard Value and ValueAct Capital Management also boosted their bets on companies like Salesforce, while Viking Global poured more money into Apple, Amazon, and Microsoft. These moves suggest that not all investors are bearish on the tech sector, and some see opportunities amidst the market turbulence.
The regulatory filings only cover the end of the second quarter, so it’s possible that some major investors bought back into the market during the latest dip. Nvidia shares, for instance, were up nearly 20% during the prior week, showing signs of potential reversal. However, the overall sentiment towards AI names in hedge funds seems to be cautious, with many funds opting to reduce their positions in leading tech companies.
The recent sell-off of artificial intelligence names by major hedge funds reflects a shift in sentiment towards the tech sector. While some investors have expressed concerns over the short-term hype surrounding AI trades, others see opportunities for contrarian bets. The coming months will be crucial in determining the future trajectory of these companies in hedge fund portfolios.