For three decades, investors have pursued the next innovation that could be as transformative as the internet for corporate America. They may finally have it in artificial intelligence.
AI allows software and systems to perform human-oriented functions and services that, under normal circumstances, would be performed by humans. Most importantly, AI’s capability to learn and grow without constant human input is what makes it amazing. This means that technology can help touch nearly every part of both the U.S. and global economies.
AI’s Stunning Economic Potential
There is no need of predictions about AI’s future, but one of the most amazing comes from analysts at PwC, who believe AI could contribute $15.7 trillion to the global economy by 2030. With those kinds of numbers, it is really no wonder some of Wall Street’s biggest and brightest minds are leading the race to invest in AI-related stocks.
Also Read: Nvidia Value Takes $900 Billion Hit Even as AI Spending Ramps Up
Nvidia: Billionaire Investors Unexpectedly Sell Off
Still, the following may leave you breathless: As artificial intelligence leader Nvidia (NVDA), whose market value has grown by nearly $3 trillion since early 2023, now ranks as the number one sell target among billionaire investors.
We can learn what is being bought and sold by Wall Street’s most important money managers from the quarterly filings known as Form 13Fs. Eight billionaires, nine if the late Jim Simons of Renaissance Technologies is included dumped shares of Nvidia in the latest quarter of this year. The most famous sellers are:
- Philippe Laffont of Coatue Management unloaded 29.37 million shares (split-adjusted for Nvidia’s stock split of 10-for-1 in June).
- Ken Griffin’s Citadel Advisors parted with 24,627,160 shares.
- Israel Englander from Millennium Management sold 7,200,040 shares.
- While profit-taking may be one reason for the sale, there are other things at work in these transactions that may have driven high-profile investors to reduce their Nvidia positions.
Growing Competition and Challenges for Nvidia
Nvidia will face growing competition over the next few months from several fronts: Advanced Micro Devices is ramping up production of the MI300X GPGPU for high-compute data centres, and Intel has a Gaudi 3 AI-accelerating chip ready to release this quarter.
Moreover, Nvidia’s four biggest customers representing nearly 40% of its net sales are trying to develop their own AI-GPU in-house. While Nvidia is currently leading the pack in both AI-GPU performance and innovation, the presence of competing chips may damage the demand for its products in data centres. This could also lower the shortage of AI GPUs, which has been among the chief drivers behind Nvidia’s pricing power.
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As AI technology evolves, Nvidia will encounter new challenges that could affect its domination and profit in this promising field.
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