The AI Revolution: Following in the Footsteps of a Billionaire
Ken Griffin, one of the most successful investors of all time, has made a name for himself by making bold moves in the market. His profits last year alone topped $7 billion, with returns of roughly 15% outpacing many of his peers. However, it’s his performance in 2022 that truly stands out, with Citadel generating profits of $16 billion, the largest annual windfall on record.
A Game-Changing Technology
Griffin has been vocal about the potential of generative AI, stating that it will be “game-changing for the economy” due to its ability to automate tasks efficiently. His actions back up his words, with his top five individual stock holdings at the end of last year being AI companies.
A Shift in Strategy
One of these AI companies, Broadcom, has seen Griffin sell more than half his stake. Broadcom is a key player in the AI ecosystem, providing a range of products used in the cable, mobile, broadband, and data center industries. Despite its impressive growth, with revenue increasing 47% year over year to $13.1 billion, Griffin has opted to pour funds into another AI stock instead.
Nvidia: The Poster Child for AI
That other AI stock is Nvidia, which has seen Griffin increase his stake by more than 7 million shares, a 454% increase. Nvidia has been at the forefront of the AI revolution, with its graphics processing units (GPUs) providing the computational horsepower needed to train and run AI models. This has led to unprecedented demand for its state-of-the-art processors, causing a significant impact on its financial results.
Unbridled Success
During its fiscal 2025 third quarter, Nvidia’s revenue soared 94% year over year to $35 billion, while its adjusted EPS surged 103% to $0.81. Management has no doubt about what drove these results, citing the “age of AI” as the primary factor.
A Compelling Opportunity
Griffin likely saw a bargain in Nvidia’s stock after rumors of a potential delay in the release of its highly anticipated Blackwell processors sent the stock tumbling. With the company’s critical place in the AI revolution and its robust prospects, it’s clear why Griffin took advantage of the opportunity.
Should Retail Investors Follow Suit?
With Nvidia stock currently trading at 69 times earnings, it may seem like a premium price. However, considering the company’s above-average growth and Wall Street’s predictions of 49% sales growth next year, the valuation is more reasonable than it initially appears. Given the company’s critical role in the AI revolution, it’s hard to argue against Nvidia being a buy.
Expert Insights
Before making a move, consider the expert insights of The Motley Fool’s Stock Advisor analyst team, who have identified what they believe are the 10 best stocks for investors to buy now. While Nvidia wasn’t one of them, the team provides an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month.
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