The rise of artificial intelligence (AI) stocks has not escaped the attention of billionaires. When opportunities arise, investment disclosure requirements indicate that they have invested heavily in AI stocks such as Nvidia.
This is important because other investors follow the lead of these top investors and imitate their transactions in hopes of similar results. Although these billionaires buy stocks for many reasons that have little to do with their followers’ investment goals, fortunately, their positions sometimes benefit investors, especially if they are more likely to choose certain stocks to be behind.
Let’s take a look at three billionaires and examine why they took positions Alibaba (NYSE: BABA), Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG)and Microsoft (NASDAQ: MSFT). Exercise can lead to insights that can help you in your investment journey.
1. Alibaba
At first glance, investors may be surprised that Appaloosa Management, a fund run by billionaire David Tepper, has taken a position in Alibaba. In 2022, the stock faced the threat of delisting when a Chinese company refused to allow the Securities and Exchange Commission (SEC) to see its internal financial audits because of its ties to the Communist Party of China. China. Although the US and China eventually resolved the issue, the strained relations between the countries put significant pressure on the stock.
As a result of the turmoil, Alibaba’s stock price has fallen nearly 20% below its initial public offering (IPO) price 10 years ago. The decline comes despite Alibaba’s revenue more than tripling over that period. That has caused its P/E ratio to briefly fall into the single digits, and its current earnings per share of 18 is well below that of any comparable conglomerate.
With the stock trading at a deep discount, Tepper increased the size of his Alibaba position by more than 11,000% in the past year. Markets can verify this process over time. The stock price has remained steady so far this year, though it is down 75% from its 2020 high.
However, if Alibaba can find a way to assuage investor concerns, Tepper’s fund and its investors could be in for a big payoff as the stock ends up priced at a growing dividend.
2. Alphabet
Alphabet has been a high-profile AI developer since it introduced the technology to its Google Search platform in 2001. However, AI investors were disappointed in the stock when OpenAI introduced a version of ChatGPT was heavily updated in early 2023, which led to speculation that Google was the parent. a curve.
Billionaire investors like Bill Ackman saw this as a buying opportunity, with 13% of his Pershing Square portfolio tied to this stock. As of the fourth quarter of 2022, Pershing Square had no Alphabet stock.
Buying at the time Pershing Square did may be the right move. Recently, Alphabet responded with its AI product launch, Google Gemini. It has also consolidated its AI research under the Google DeepMind umbrella. Given its $108 billion net worth, it’s likely to buy any AI innovation it can’t develop in-house.
In addition, despite the sentiment, the stock has risen by almost 60% in the past year, and its 29 P/E ratio makes it the cheapest company with and the market is over $2 trillion. That positions Alfabeta to offer safety and high potential for other benefits.
3. Microsoft
The Microsoft opportunity was of particular interest to Stanley Druckenmiller, manager of the Duquesne Family Office fund. He saw that Microsoft’s CEO, Satya Nadella, has brought the tech giant back to prominence as a leader in cloud computing.
Succeeding in the cloud today means leading in AI. Druckenmiller started buying shares at the bottom of the 2022 bear market and increased the price when Microsoft’s partnership with AI product development specialist OpenAI came to light. Now, it makes up about 11% of Duquesne’s endowment.
The company built on that partnership, combining the Bing search engine with ChatGPT to enable it to compete with Google Search. In addition, it launched Copilot, an AI-powered chatbot that combines ChatGPT’s powerful language model with Microsoft tools to create commands that can be delivered in natural human language.
Among its creations, it has a capital of about $ 80 billion, which gives a great choice. Indeed, optimism about AI has helped Microsoft stock rise by nearly 40% in the past year.
With a P/E ratio of about 39, Microsoft has become a moderately valued AI stock, but given its tools and AI leadership, the stock should continue to rise over time. it passes.
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Suzanne Frey, CEO of Alphabet, is a member of The Motley Fool’s board of directors. Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Alphabet, Microsoft, and Nvidia. The Motley Fool recommends the Alibaba group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a publicity strategy.
Have you lost Nvidia? Billionaires Buy These 3 Artificial Intelligence (AI) Stocks Hand Over Fist was originally published by The Motley Fool.
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