AI Revolution: What Billionaires Know About Investing In AI Stocks

In 2023, Artificial Intelligence (AI) gained immense popularity due to the emergence of high-tech chatbots such as ChatGPT, developed by OpenAI and Alphabet’s Bard. The power of these AI-driven dialogue models triggers a surge in public enthusiasm toward AI as we brace ourselves for an unpredictable future.

According to Cathie Wood’s Ark Investment Management, the revenue opportunity for AI software could come to a whopping $14 trillion by 2030. Forecasts on how much sales potential this technology could yield differ significantly.

Billionaires in the hedge fund industry have been going wild with their stock purchases recently, and two specific names stand out. These investors, who don’t bury their heads in the sand, have frantically bought shares of [name 1] and [name 2].

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Billionaire Seth Klarman, a value investor and hedge fund manager, are well-known yet enigmatic on Wall Street. He has been an advocate for this investment approach for a long time.

The Baupost Group, helmed by Seth Klarman, is one of the largest hedge funds. It is said that Klarman is “one of the top money managers of all time” and provides management with over $30 billion in assets. MarketWatch reported this accolade for him.

The Baupost Group, a hedge fund, invested heavily in Alphabet in the 4th quarter of this year by increasing their ownership from just under 1.4 million shares to an impressive 3.99 million, keeping the stake at more than 6% of their total holdings and currently worth about $104 million.

In 2011, Google Brain – the neural network created by Andrew Ng and Jeff Dean – entered the Artificial Intelligence scene and has since been developing an AI system capable of recognizing images.

In 2016, two years after its acquisition by Google, DeepMind proved its worth by applying machine learning to reduce the company’s data center cooling bill by 40%. This cemented their place in the AI history books.

In response to the buzz ChatGPT caused, Alphabet quickly launched Bard. However, several costly mistakes occurred during the launch, which tarnished its debut.

It’s important to note that Alphabet has had a long-standing presence in AI, boasting a set of powerful tools, including some utilized in Google search, Pixel phone image processing, and integrating its Cloud services into the realm of artificial intelligence – suggestive of better prospects for the future.

Klarman’s preference for value investing likely drew him to Alphabet’s exceptionally low stock price. Trading only four times next year’s sales is at a bargain-basement price not seen since 2013, making it appealing to the investor.

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Griffin has become a Wall Street legend due to his impressive success. His hedge fund Citadel has made him one of the wealthiest managers in history, with a staggering income of $4.10 billion last year alone. He is respected as the founder and CEO of Citadel.

In 2022, Citadel saw a massive income surge, with profits of around $16 billion, breaking all previous records and being hailed as “the biggest annual windfall on record” by CNN. He deservedly earned every single dollar.

Citadel significantly upped its Advanced Micro Devices (AMD-1.10%) ante late last year, acquiring 5 million shares, taking its total stake to 6.50 million with a total current value of $598 million – representing a 333% increase.

AMD is renowned for its GPUs popular among gamers. This year, the company shifted its attention to incorporate cloud computing and AI by announcing the Ryzen 7040 insert mobile chip for laptops. It was unique for a CPU due to having an in-built AI engine.

The CEO, Lisa Su, has announced the addition of MI300 to the company’s AI chip series. This APU combines an advanced CPU with a built-in graphics processing unit. It aims to optimize AI systems by decreasing training time while increasing performance power.

For 2022, AMD witnessed a tremendous achievement, with its revenue increasing by 44% and R&D investments escalating by 25%. This enabled them to gain bragging rights. However, though this development uplifted their overall revenues, their adjusted profits dropped 25%, demonstrating their commitment to utilizing the data center and AI opportunities.

AMD stock is a bargain that undoubtedly caught the eye of Griffin; since the pandemic hit, prices have not been this low. Interest in artificial intelligence has surged lately, and AMD stock trades for around 5 times the sales projected for next year.

The Motley Fool has a disclosure policy and holds Alphabet and Advanced Micro Devices positions. On its board of directors is Alphabet executive Suzanne Frey, while Danny Vena also holds positions in Alphabet. The Motley Fool recommends both Alphabet and Advanced Micro Devices.

Artificial intelligence (AI) has been a game-changer in many industries, and investors are noticing it. Billionaires like Peter Thiel and Elon Musk are investing in AI stocks with an eye toward the potential for significant growth and disruption. The Motley Fool article highlights two such companies: NVIDIA and Alphabet. Both have a strong track record of innovation and growth, and their investments in AI technology have put them at the forefront of the AI revolution.

As AI continues transforming how we live and work, these companies are well-positioned to benefit from its growth. While risks are associated with investing in any stock, NVIDIA and Alphabet are worth considering for those looking to capitalize on the AI revolution. As with any investment, however, it is important to research and make an informed decision.

Source: The Motley Fool

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