Nvidia Shares versus Amazon Shares: Billionaire Ken Griffin Engages in Buying and Selling Transactions
Nvidia Shares versus Amazon Shares: Billionaire Ken Griffin Engages in Buying and Selling Transactions
Ken Griffin, the head of Citadel, which boasts the highest profit-making hedge fund in history, as per LCH Investments' reports, serves as an exemplary study for investors. They can monitor the stocks that Griffin purchases and sells by checking out the quarterly Form 13F filings that Griffin submits to the SEC.
While Nvidia (NVDA 3.08%) and Amazon (AMZN 0.73%) play crucial roles in the burgeoning artificial intelligence sector, Griffin displayed a unique stance towards both companies in the first half of 2024.
During the first quarter, Griffin offloaded 2.4 million Nvidia shares, reducing his stake by 68%. Simultaneously, he upped his stake in Amazon by 6%, purchasing 352,453 shares. In the second quarter, Griffin continued with this momentum by selling 9.2 million Nvidia shares, cutting down his stake by 79%. But he also increased his position in Amazon by 17%, purchasing 1.1 million shares.
It's worth noting that Amazon held the largest share in Citadel's overall portfolio as of June 30. This indicates Griffin's faith in the company.
Nvidia: The stock that Griffin has been parting ways with
Nvidia's graphics processing units (GPUs) have proven to be indispensable in data center accelerators, especially in the realm of artificial intelligence. Forrester Research even stated, "Without Nvidia's GPUs, modern AI wouldn't exist." Nvidia's competitive edge lies in its ability to pair superior GPUs with a comprehensive ecosystem of software development tools, offering developers an unmatched experience.
In 2006, Nvidia introduced CUDA, a breakthrough programming model that allows developers to create GPU-accelerated applications. Since then, the ecosystem has expanded to comprise over 400 code libraries and 600 pre-trained models, making software development a cinch across various domains, including data science, machine learning, scientific simulation, and augmented reality.
Recently, Nvidia has integrated CUDA into subscription software and cloud services. Its AI Enterprise platform simplifies the process of developing, deploying, and managing AI applications, catering to various use cases, from recommender systems to autonomous robots. Similarly, DGX Cloud offers the supercomputing infrastructure and software required for AI development workflows.
During the second quarter of fiscal 2025, Nvidia reported a significant surge in sales by 122% to $30 billion and a corresponding jump in non-GAAP net income by 152% to $0.68 per diluted share. Analysts anticipate this momentum to continue, with Nvidia's next-generation Blackwell GPU officially going into production this quarter, and with demand soaring, the chips are already sold out for a year.
Wall Street forecasts Nvidia's adjusted earnings to grow by 51% annually through fiscal 2026. Despite Griffin's decision to sell Nvidia stock, long-term investors should consider making a purchase today, keeping in mind that the price might fluctuate when Nvidia reports earnings on Nov. 20.
Amazon: The stock that Griffin has been embracing
Amazon thrives on three main revenue drivers: e-commerce, digital advertising, and public cloud services. It dominates all three markets, leveraging AI to boost revenue and enhance efficiency across its businesses. For example, as the most-visited online marketplace, Amazon extracts valuable insights from its data to optimize inventory levels and delivery routes using machine learning models.
Likewise, the same marketplace data powers Amazon's new shopping assistant, Rufus, while helping advertisers target consumers with personalized content using machine learning models. Amazon has catapulted into the top tier of ad tech companies worldwide, with its ad revenue growing at a brisker pace than industry leaders Alphabet and Meta Platforms.
When it comes to public cloud services, Amazon Web Services (AWS) is a trailblazer. It accounted for 31% of cloud infrastructure and platform services spending last quarter, almost matching Microsoft and Alphabet's combined share. AWS is poised to capture even more market share as AI continues to drive growth in cloud computing. Gartner recognized AWS's leadership in AI developer services and machine learning platforms.
Amazon posted impressive financial results in the third quarter, surpassing analysts' expectations on both revenue and profits. Revenue inflated by 11% to $159 billion, driven in large part by advertising and cloud services. Meanwhile, operating margins expanded by more than 3 percentage points, and net income leaped by 52% to $1.43 per diluted share.
Looking ahead, analysts expect Amazon's earnings to rise by 24% annually through 2025. Despite its valuation of 44.5 times earnings, some investors may find it tolerable, though affordability may be debatable. Long-term investors could consider making a modest investment now, as a moderate pullback might present an attractive buying opportunity.
Griffin's decisions to sell Nvidia shares while increasing his stake in Amazon demonstrates his strategic approach to investing in the technology sector, as he recognizes the potential in both companies' futures. Moving forward, understanding the financial implications of these investments can easily be done by tracking Griffin's Form 13F filings, as they reveal his positions in various companies, including those in the finance, technology, and AI sectors.
Given Griffin's strategic investment in Amazon, it's evident that he sees the company's potential for significant growth in the coming years due to its dominant positions in e-commerce, digital advertising, and public cloud services. Leveraging AI to optimize its business operations and maximize efficiency, Amazon is poised to continue its financial growth and become an even more formidable competitor in the technology industry.