As the market experiences a third-quarter sell-off, major hedge funds have been quick to shed some of the leading artificial intelligence (AI) stocks of 2024. Regulatory filings have revealed that billionaire investors have been selling off stakes in prominent companies such as Nvidia, Alphabet, and Meta Platforms. This move comes ahead of a period of volatility in the AI trade, with investors taking profits in anticipation of a potential market downturn.
It is noteworthy that some big investors, including Stanley Druckenmiller of Duquesne Family Office, have voiced concerns about the overhyped nature of certain short-term AI trades. Druckenmiller revealed that he sold off a significant portion of his Nvidia stake earlier in the year, reducing his position by about 88% in the second quarter. Appaloosa, led by David Tepper, also joined the trend by slashing its stake in Nvidia by 84%. The selling trend extended to other major players like Soros Capital, which liquidated its bet on the company.
Heavy Selling in Big Tech
In addition to Nvidia, Alphabet also faced considerable selling pressure from hedge funds in the last quarter. Daniel Sundheim’s D1 Capital and other notable investors significantly reduced their positions in both Alphabet and Meta Platforms. Furthermore, hedge funds trimmed positions in other megacap names like Amazon, Microsoft, and Apple. Druckenmiller, for instance, scaled back his investments in Microsoft and Apple by 64% and 79%, respectively. Warren Buffett’s Berkshire Hathaway also made headlines by selling nearly half of its stake in Apple.
Shifts in Investment Strategy
While some hedge funds were busy unloading AI stocks, others took a different approach by beefing up their positions in major technology companies. For example, Loeb made a substantial new investment in Apple and increased his stake in Taiwan Semiconductor Manufacturing. Starboard Value, ValueAct Capital Management, and Viking Global also made strategic moves by boosting their investments in various tech companies. These actions indicate that not all investors are abandoning the tech sector amid the market uncertainty.
It is worth noting that the regulatory filings only cover the end of the second quarter, leaving room for the possibility that major investors may have reinvested in AI stocks during the recent market dip. While Nvidia shares have shown some recovery in recent weeks, they remain down from their peak. This could present a potential buying opportunity for investors looking to capitalize on the recent market volatility.
The recent mass sell-off of AI stocks by major hedge funds reflects a broader trend of caution amid market volatility. While some investors have opted to reduce their exposure to certain tech companies, others have chosen to increase their positions, signaling varying strategies in response to the current market conditions. As the market continues to navigate uncertainty, it will be interesting to see how these investment decisions play out in the coming months.