Nvidia or Alphabet: Billionaire Steve Cohen Pulls the Trigger on One Top AI Stock

Business Insider

27-05-2025

AI has been all the rage on Wall Street for a while now, but it's more than just a hot trend destined to be replaced by the next shiny new thing.
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AI isn't just hype – it's steadily reshaping industries, boosting productivity, and solving real-world problems in ways that are built to last. From streamlining logistics and automating customer service to enabling personalized healthcare and powering next-gen cybersecurity, its applications are already transforming day-to-day operations. Major corporations are investing billions to integrate AI into their core strategies, while startups are racing to build the next breakthrough.
That take is echoed by billionaire Steve Cohen, the founder of Point72, a hedge fund with $35 billion of assets under management, who thinks AI is indeed here to stay.
'This is a 10- to 20-year theme. It's gonna affect everybody in how they conduct their lives, how they do their business,' Cohen said. 'We're still in the first, second inning of something that's going to be transformational for the economy and the world… It is such a dramatic, important shift that to ignore it, I think it's a mistake.'
Cohen certainly isn't ignoring it. He's been making moves involving two of the biggest AI stocks out there – Nvidia (NASDAQ:NVDA) and Alphabet (NASDAQ:GOOGL). Cohen, who has a net worth of $21.3 billion, has been loading up on one while trimming his holdings of the other. So, let's find out which AI giant he has been leaning into recently.
Nvidia
Let's start with the undisputed AI chip king, Nvidia. That regal sobriquet is entirely fitting here, as possibly no other company has come to embody the AI trend as much as Nvidia. Before the AI shenanigans kicked off – that can be roughly traced to the release of OpenAI's ChatGPT in late 2022 – Nvidia was a semiconductor heavyweight but the rise of AI catapulted it to the upper echelons of the market cap pile, with the company even at times taking on the mantle of the world's most valuable company.
How did it do that? Simple. It completely cornered the market for the chips that power AI applications, a segment where it commands more than an 80% share. The growth spurt's ferocity initially took Wall Street by surprise but over the past couple of years it has become almost standard for Nvidia to deliver beat-and-raise earnings reports.
That was the case again in its fiscal fourth-quarter readout (ending in January). Nvidia reported a 78% year-over-year increase in revenue to $39.33 billion, surpassing the Street's forecast by $1.17 billion. This included a record $35.6 billion from its Data Center segment, up 93% from the prior year. Adjusted earnings per share came in at $0.89, beating expectations by $0.04. For FQ2, Nvidia projects revenue of around $43.0 billion, give or take 2%, ahead of the $42.05 billion Wall Street was looking for. The company is set to announce the results on May 28.
That said, not everything is all rainbows and unicorns at this chip colossus. While the growth remains impressive, it is steadily becoming less stellar as time progresses.
That might be why Steve Cohen made a move. In Q1, he slashed his Nvidia position by more than half, unloading over 2 million shares.
That cautious move finds sympathy with D.A. Davidson analyst Gil Luria, who points out why investors should tread carefully here.
'We suggest a more nuanced view regarding NVIDIA's different segments in order to isolate opportunities and risks. We believe the conventional aggregation of MSFT/ AMZN/GOOGL/META capex may no longer be adequately capturing the current crosswinds. While progress on China trade and the elimination of potential diffusion rules are positive developments, we see China restrictions as an overhang until the new rules are announced,' the 5-star analyst said. 'While NVIDIA will likely replace the restricted H20 product with an even more degraded product, we believe that at some point demand for increasingly degraded chips may be replaced by new generation of Chinese chips that are quickly catching up on performance.'
To this end, Luria rates the shares as Neutral while his $120 price target factors in a one-year slide of ~9%. (To watch Luria's track record, click here)
Luria, however, is amongst a minority on Wall Street. While 3 others join him on the sidelines and one offers a bearish view, with an additional 34 Buys, the stock claims a Strong Buy consensus rating. At $164.51, the average price target implies the stock will climb 25% higher in the months ahead. (See NVDA stock forecast)
Alphabet
Nvidia has made the most of the AI opportunity but one company that appears under threat from the game-changing tech is Alphabet, the parent company of Google (and YouTube, Waymo, Waze, and various other businesses).
Alphabet is feeling the heat from AI due to how quickly generative AI is shifting the way people search for and interact with information – historically Google's bread and butter. AI-powered tools like ChatGPT offer users direct, conversational answers instead of traditional lists of links, which could diminish the value and traffic of Google Search, the main driver of Alphabet's ad revenue. At the same time, competitors like Microsoft have integrated advanced AI models into products like Bing and Office, creating pressure on Alphabet to respond quickly or risk losing relevance and market share.
But it's not as if Alphabet is just taking all of this in its stride. To counter the threat, it has been aggressively investing in AI development and integration across its ecosystem. It launched its own generative AI chatbot, initially Bard and now rebranded as Gemini, based on its in-house Gemini model, and has embedded AI features into Search, Gmail, Docs, and Android. The company is also focused on developing multimodal AI capabilities and infrastructure, such as its custom TPU chips and the expansion of Google Cloud's AI offerings.
In the meantime, a look at the company's latest quarterly results shows the company is doing just fine. In Q1, the tech giant posted strong double-digit revenue growth, with sales climbing 12% to $90.23 billion, beating the forecast of $89.15 billion. At the other end of the scale, EPS came in at $2.81, exceeding expectations by $0.80.
Cohen must have been very pleased with all of that. He opened a new position in GOOGL stock during Q1, loading up on 401,962 shares. These are currently worth ~$68 million.
For Tigress Financial's Ivan Feinseth, an analyst who ranks amongst the top 2% of Wall Street stock experts, the case for investing in this name is clear. 'Ongoing AI innovation and implementation will continue to drive increasing advertising and cloud monetization, continuing to drive revenue and cash flow growth, and increasing shareholder value creation,' writes the 5-star analyst. 'GOOGL's ability to leverage AI functionality across all of its key product lines combined with ongoing innovation continues to drive growth in digital advertising, and market share gains in other key product lines will continue to drive accelerating Business Performance trends. GOOGL's strong balance sheet and cash flow enable the ongoing funding of key growth initiatives, strategic acquisitions, and the further enhancement of shareholder returns through ongoing share repurchases and dividend increases.'
Feinseth isn't shy about his bullish stance on Alphabet – he's going all in with a Strong Buy rating and a Street-high price target of $240, suggesting the stock could surge as much as 42% from current levels. (To watch Feinseth's track record, click here)
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