Two Billionaire Investors Sell INVISTA, Buy This Artificial Intelligence (AI) Stock Instead

It's no secret that Artificial Intelligence (AI) is the hottest game in town for investors, and the huge stock market uptick in 2023 and 2024 was driven in large part by a surge of interest in all things AI.

There's no company.Bienvenido (NASDAQ: NVDA)Nvidia is at the forefront of the artificial intelligence boom. The chipmaker's stock soared 2,391 TP3T last year and nearly 751 TP3T this year, but is the enthusiasm for Nvidia starting to fade? Maybe. Two billionaire investors are selling Nvidia in favor of another artificial intelligence stock.

Thumbs up for INVESTMENT

Many people know David Tepper as the owner of the Carolina Panthers. However, the hedge fund he founded in 1993, Appaloosa Management, was so successful that it amassed enough money to buy an NFL franchise. Today, Tepper's net worth is $20.6 billion.

Tepper is bullish on artificial intelligence. Eight of Appaloosa Investment Group's top ten holdings are AI stocks. nvidia is the hedge fund's fourth-largest position, but Tepper seems to think the stock's strong momentum may be nearing an end. in the fourth quarter of 2023, he sold nearly 23% of Appaloosa's holdings in the graphics processing unit (GPU) manufacturer. Appaloosa's stake in the GPU maker was nearly 23%.

He's not the only billionaire investor who's not that interested in Nvidia. Chase Coleman first made his name in the investment world by working with legendary hedge fund manager Julian Robertson. He then ran his own hedge fund, Tiger Global Management, and later ventured into venture capital. He is now worth US$5.7 billion.

Tiger Global Investors Inc. reduced its position in shares of Nvidia by nearly 13% in the fourth quarter. Nvidia is still ranked 10th in the hedge fund's portfolio, with holdings valued at about $480 million by the end of 2023. However, Coleman is withdrawing some of his profits after the stock's sharp rise.

Thumbs up for Amazon.com

Both Tepper and Coleman believe thatAmazon (NASDAQ resonance code: AMZN)is one of the better artificial intelligence stocks to buy in the fourth quarter. Tepper's Appaloosa fund increased its position in the e-commerce and cloud services giant by more than 5%. Coleman's Tiger Global Management increased its position in Amazon by 24%.

Why these two billionaire investors are more bullish on Amazon than Nvidia, I suspect Tepper and Coleman may believe that Nvidia's valuation is now at a level where any sign of trouble could lead to a major sell-off. Meanwhile, Amazon seems to be building sustainable momentum.

Artificial intelligence is undoubtedly a key growth driver for Amazon. The company's cloud platform, Amazon Web Services (AWS), is the largest cloud service provider by market share, and AWS has invested heavily in supporting generative AI developers in particular.

Amazon is also using generative AI internally. "We believe it [generative AI] will ultimately generate tens of billions of dollars in revenue for Amazon over the next several years," said Andy Jassy, chief executive officer, on the company's fourth-quarter earnings call.

Amazon is more than just an artificial intelligence stock, of course. The company's efforts to improve the profitability of its e-commerce business are paying off. Amazon's North American business unit has grown its operating margins for seven consecutive quarters.

It has also become a major player in the digital advertising market. In the fourth quarter, Amazon's ad revenue soared 26% year-over-year, and that growth came before the company launched ads on Prime Video.

Buying more Amazon stock has paid off for Tepper and Coleman. So far, Amazon's stock price has risen by more than 20%.

Should you buy Amazon too?

Investors shouldn't buy Amazon simply because two hedge fund billionaires sold Nvidia. However, it's a good idea to look at the potential reasons behind Tepper and Coleman's actions.

I think the reasons why Tepper and Coleman increased their holdings of Amazon stock in the fourth quarter still hold true. The company's profits will likely continue to rise. Artificial intelligence and advertising remain strong growth drivers. In my view, Amazon remains an excellent long-term pick.

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John Mackey, former chief executive officer of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. keith Speights owns shares of Amazon. the Motley Fool has stock recommendations for Amazon and Nvidia. the Motley Fool has a disclosure policy.

2 Billionaire Investors Are Selling INVISTA and Buying This Artificial Intelligence (AI) Stock Instead was originally published by The Motley Fool.