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Artificial intelligence (AI) holds the transformative potential to reshape our lives—at least if the tech giants are to be believed. With products like ChatGPT making headlines, the true capability of AI still awaits full revelation. This anticipated evolution is fueling remarkable growth for companies delving into AI. Top fund managers are fervently purchasing shares in these firms, aiming to cash in on this technological boom. Funds managing over $100 million in assets must disclose their trades quarterly to the SEC via form 13F, and this information is public, providing valuable insights for savvy investors. However, it's worth noting that the so-called "smart money" isn't always flawless, as some managers also offload shares in these companies. Here's a closer look at five AI stocks that billionaires have invested heavily, pouring roughly $67 billion into them last quarter.
1. Nvidia
Unsurprisingly, Nvidia (NASDAQ: NVDA) topped the list with the most hedge-fund acquisitions. The company has captivated the investment community by establishing itself as the premier chipmaker for AI applications. Demonstrating impressive revenue growth while maintaining relatively low costs, Nvidia has solidified its place in AI. Fund managers snapped up $15.9 billion worth of Nvidia shares last quarter, with significant purchases including $6.2 billion from Vanguard and $1.8 billion from BlackRock.
2. Amazon
Amazon (NASDAQ: AMZN) is another top pick, largely due to its dominance in the cloud computing sector through Amazon Web Services (AWS), which controls over 30% of the market. Partnering with Nvidia to equip its data centers and investing $4 billion in OpenAI rival Anthropic underscores Amazon’s commitment to staying ahead in the AI race. Hedge funds acquired $14.4 billion of Amazon shares last quarter, with Vanguard securing $2.5 billion and BlackRock adding $1.9 billion.
3. Microsoft
Microsoft (NASDAQ: MSFT), backing OpenAI—the creator of the viral ChatGPT—remains a formidable AI player. The rapid adoption of ChatGPT transformed it into the fastest-growing technology in history. Microsoft is gradually eating into AWS's share as the second-largest player in the cloud computing market. Equipped with Nvidia's powerful chips and hosting the world's most-used AI application, Microsoft has a strong AI portfolio. Last quarter, hedge funds purchased $13.1 billion worth of Microsoft shares, with BlackRock and Geode Capital Management making significant buys of $2.8 billion and $1.3 billion, respectively.
4. Apple
Apple (NASDAQ: AAPL) had a tumultuous year, with its shares declining as investors doubted its AI progress. However, Apple recently joined the AI fray with its new offering, Apple Intelligence. The upgrades in its products will necessitate powerful computing resources, prompting users to switch to newer, pricier models, potentially reviving Apple's iPhone sales. Hedge funds picked up $11.8 billion worth of Apple shares last quarter, with Geode Capital and Lazard making significant investments of $1.3 billion and $983.9 million, respectively.
5. Broadcom
Broadcom (NASDAQ: AVGO) also garnered significant investment due to its pivotal role in AI infrastructure. While not competing directly with Nvidia in the core chip market, Broadcom supplies crucial components that enable efficient communication between chips in AI data centers. A leading provider of semiconductor and infrastructure software products, Broadcom serves a wide array of markets, including data centers, networking, and industrial sectors. Last quarter, hedge funds invested $11.8 billion in Broadcom, with Vanguard and Jennison Associates making major purchases of $1.6 billion and $1.5 billion, respectively.
Understanding where substantial investments are flowing can benefit investors, but remember, it's just one part of the decision-making process. Keeping a pulse on these giants' moves could unveil substantial opportunities as they innovate and expand.
