Latest news with #StephenMandel
Yahoo
2 days ago
- Business
- Yahoo
Billionaires Stanley Druckenmiller and Stephen Mandel Both Exited Their Stakes in Nvidia and Have Piled Into This Leading Artificial Intelligence (AI) Stock Instead
Quarterly-filed Form 13Fs offer investors a way to track which stocks Wall Street's preeminent money managers are buying and selling. Over a 12-to-15-month span following June 2023, Duquesne Family Office's Stanley Druckenmiller and Lone Pine Capital's Stephen Mandel sent their respective Nvidia positions packing. However, these two billionaire asset managers can't stop buying a world-leading chip company that plays an indispensable role for the artificial intelligence (AI) revolution. 10 stocks we like better than Nvidia › Data is Wall Street's currency, and there's an abundance of it to go around. Between earnings season -- the six-week stretch each quarter where most S&P 500 companies report their operating results -- and economic data releases, there's an almost overwhelming amount of information for investors to absorb. Occasionally, something important can fall through the cracks. For example, May 15 marked the deadline for institutional investors overseeing at least $100 million in assets under management to file Form 13F with the Securities and Exchange Commission -- and you might have missed it. This filing, which is due no later than 45 calendar days following the end to a quarter, details which stocks, exchange-traded funds (ETFs), and (select) stock options Wall Street's brightest money managers purchased and sold in the latest quarter. It can offer big-time clues as to which influential stocks are garnering interest or falling out of favor. While Berkshire Hathaway's Warren Buffett is the stock market's most-followed money manager, he's far from the only billionaire investor known to move markets. For instance, Duquesne Family Office's Stanley Druckenmiller and Lone Pine Capital's Stephen Mandel have exemplary investment track records of their own, along with billions of dollars in assets under management. What's particularly noteworthy about the first-quarter 13Fs from Druckenmiller's and Mandel's respective funds has been their approach to the artificial intelligence (AI) revolution. Both billionaires have dumped the preeminent AI stock on Wall Street in favor of a company that's critical to enterprise AI data centers. With the analysts at PwC pegging the addressable market for artificial intelligence at $15.7 trillion by 2030, there's room for hundreds of businesses to get their piece of the pie. However, no company has been a more direct beneficiary of the evolution of AI than Nvidia (NASDAQ: NVDA). It's also the stock billionaires Stanley Druckenmiller and Stephen Mandel sent packing. Accounting for Nvidia's 10-for-1 forward split in June 2024, Duquesne Family Office held 9,500,750 shares in the June-ended quarter of 2023. Meanwhile, Lone Pine Capital possessed 6,416,490 shares of Nvidia, also at the end of June 2023. But over the following 15 months for Druckenmiller and 12 months for Mandel, both billionaires would oversee the complete purge of their respective fund's Nvidia holdings. While there's no denying that Nvidia's Hopper (H100) graphics processing unit (GPU) and Blackwell GPU architecture are the preferred options in AI-accelerated data centers, and it's pretty clear that no other external competitors are particularly close to challenging Nvidia's hardware in terms of compute abilities, there are still viable reasons for Druckenmiller and Mandel to have cashed in their chips. One obvious reason to sell is simple profit-taking. Nvidia stock skyrocketed from early 2023 into late 2024, which increased its valuation by more than $3 trillion. We've never witnessed a megacap business add $3 trillion in market cap so quickly before, which may have encouraged these two billionaires to lock in their gains. But there might be more than just profit-taking behind this selling activity. For instance, it's only logical to expect competitive pressures to mount in the hardware arena. Even though Hopper and Blackwell hold most of the AI-GPU market share in high-compute data centers, external competitors are ramping up production of existing chips and bringing more energy-efficient hardware to market. What's more, many of Nvidia's top customers by net sales are developing AI-GPUs and AI solutions of their own. Even though these chips aren't going to be as fast as the Hopper or Blackwell, they're expected to be considerably cheaper and they won't be backlogged like Nvidia's hardware. This is a direct threat to the AI-GPU scarcity that's afforded Nvidia superior pricing power for its GPUs. History isn't exactly in Nvidia's corner, either. Despite AI supporting a lofty addressable market, every next-big-thing technology and innovation for more than three decades has endured an early stage bubble-bursting event. In short, investors have a historically strong tendency to overestimate how quickly a new innovation will gain utility and be adopted on a mainstream basis. With artificial intelligence likely needing time to mature as a technology, it's the most-direct beneficiary, Nvidia, which could feel the pain if a bubble forms and bursts. While Duquesne's and Lone Pine's billionaire chiefs pared down the number of stocks they're holding amid a volatile first quarter, there's one artificial intelligence stock both have been buying -- and it plays a vital role in the expansion of AI-accelerated data centers. The new AI apple of Druckenmiller's and Mandel's eye is none other than leading chip fabrication company Taiwan Semiconductor Manufacturing (NYSE: TSM), which is more commonly known as "TSMC." Duquesne more than quintupled its existing stake by adding 491,265 shares of TSMC during the March-ended quarter, while Lone Pine's 13F shows that 104,937 shares of TSMC were purchased in the first quarter of 2025. Most AI-GPU companies rely on Taiwan Semi's fabrication services, including industry leader Nvidia and key rival Advanced Micro Devices. TSMC is in the process of rapidly expanding its monthly chip-on-wafer-on-substrate (CoWoS) capacity from approximately 35,000 units in 2024 to an estimated 135,000 units monthly by 2026. CoWoS is a technology used to package high-bandwidth memory, which is necessary for high-compute data centers where software and systems are making split-second decisions. With demand for AI-GPUs overwhelming their supply over the last two years, TSMC has enjoyed a significant backlog for its chip fabrication services and has seen more its net sales skew toward high-performance computing, which can yield higher margins for the company. On a year-over-year basis, TSMC's net sales from high-performance computing surged from 46% to 59%, as of the March-ended quarter. Although the possible bursting of an AI bubble would be a concern for Taiwan Semiconductor Manufacturing, the company's order backlog and revenue diversification offers some semblance of protection. For instance, 28% of net sales in the first quarter derived from advanced chips used in smartphones. Apple prominently leans on TSMC for the chips used in the iPhone. The great thing about smartphones and wireless service access is they've both evolved into basic necessities for most Americans. Even though demand for smartphone chips isn't growing as quickly as it once did, the cash flow from this segment tends to be highly predictable for TSMC. Taiwan Semi has a long runway of opportunity in Internet of Things and automotive, as well. As homes and vehicles become more technology-dependent, companies like TSMC will be relied on to manufacture these advanced chips. Lastly, Druckenmiller and Mandel may have been encouraged by the dip in Taiwan Semiconductor's stock in the first quarter. Though TSMC stock isn't (currently) historically inexpensive, its shares did drop to a forward price-to-earnings ratio of nearly 15 during tail-end of the March quarter. This makes for an attractive multiple, when compared to Nvidia. Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor's total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Berkshire Hathaway, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy. Billionaires Stanley Druckenmiller and Stephen Mandel Both Exited Their Stakes in Nvidia and Have Piled Into This Leading Artificial Intelligence (AI) Stock Instead was originally published by The Motley Fool Sign in to access your portfolio
Globe and Mail
3 days ago
- Business
- Globe and Mail
This AI Giant Is Among the Top 5 Holdings of Billionaires David Tepper, Philippe Laffont, and Stephen Mandel Jr. -- and It's Not Nvidia
Investors, including billionaires, have generated enormous returns by investing in Nvidia (NASDAQ: NVDA) in recent years. The artificial intelligence (AI) chip giant climbed more than 800% from the start of 2023 through the end of last year as demand for its products and services soared. And with the AI market forecast to reach beyond $2 trillion a few years down the road, it's likely Nvidia will continue to benefit. But it's important to remember that Nvidia isn't the only attractive AI bet to be found. In fact, right now, some of the world's top investors are favoring another AI giant over Nvidia. This particular player is among the top five holdings of billionaires David Tepper of Appaloosa Management, Philippe Laffont of Coatue Management, and Stephen Mandel Jr. of Lone Pine Capital. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » This company, like Nvidia, already has brought in billions of dollars in revenue thanks to AI -- and could win as the AI boom continues. Let's find out more. These billionaires like technology stocks First, it's important to note that these three billionaires have significant positions in technology stocks, with other such players among their top 10 holdings. So they clearly believe in the AI revolution and are setting themselves up to potentially gain as AI becomes more and more a part of our daily lives and the operations at businesses of every size. For example, Tepper and Mandel each have three Magnificent Seven stocks among their 10 most heavily weighted holdings, and Laffont has four. So, which company has caught the eye of these technology-focused investors? None other than AI powerhouse Amazon (NASDAQ: AMZN). As of the first quarter of the year, Amazon is the third biggest stock position in Tepper's $8.3 billion portfolio, the second-biggest in Laffont's $22 billion portfolio, and the third- largest in Mandel's $11 billion fund. Here are the details: Tepper holds 2,510,000 Amazon shares, and the stock represents 5.7% of the portfolio. Laffont holds 10,753,808 Amazon shares, and the stock represents 9.02% of his portfolio. Mandel holds 4,352,740 Amazon shares, and they represent 7.15% of his portfolio. This is according to the billionaires' 13Fs, filings that managers of $100 million or more must submit to the Securities and Exchange Commission on a quarterly basis. Is this AI player right for you? Now the question is: These billionaires clearly see Amazon as a fantastic AI investment, but is it right for you too? After all, though billionaires have demonstrated their investment expertise, some of their moves may not suit your investment strategy or comfort with risk. It's important to take these elements into consideration before diving in. You probably are most familiar with Amazon thanks to its e-commerce business. It's built an empire in the area, and one that extends around the globe. The operation helps the company generate billions of dollars in revenue year after year, and its extensive fulfillment network and popular subscription program Prime offer it a significant competitive advantage, or moat. But Amazon also is becoming a leader in AI, using the technology to streamline those e-commerce operations and even developing and selling AI products and services to customers through its Amazon Web Services (AWS) unit. In fact, due to Amazon's aggressive push into the AI space, AWS recently delivered a $117 billion annual revenue run rate. So Amazon already is generating significant growth from this hot technology. Well positioned for a win And since AWS is the world's leading cloud services provider, it's in the perfect spot to capture more and more business. As AWS customers develop AI projects, they have all that they need right at their fingertips on AWS -- from access to top chips like Nvidia's to a fully managed service that tailors popular large language models to a customer's needs. The AI buildout continues, and AWS is set to gain from this and from the next stages of AI, as customers apply AI to their businesses more and more. Meanwhile, Amazon offers a solid track record of earnings growth and has demonstrated its ability to manage turbulent times and go on to grow. For example, the company revamped its cost structure when higher inflation hurt earnings a few years ago and returned to growth within a year. All of this shows that Amazon is well positioned to benefit from the AI boom, but the stock also offers you security thanks to its well-established and profitable e-commerce and cloud businesses. And this means that, whether you're a cautious or aggressive investor, you may, like the billionaires, want to make Amazon one of your key AI bets. Should you invest $1,000 in Amazon right now? Before you buy stock in Amazon, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor 's total average return is979% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.
Yahoo
23-05-2025
- Business
- Yahoo
These AI Stocks Soared 270% to 1,400% in 5 Years, but Billionaires Keep Buying
Following the investment moves of billionaires could help investors find the best stocks to ride artificial intelligence (AI) growth. Taiwan Semiconductor and Nvidia were popular stock buys last quarter for select billionaire fund managers. Nvidia faces risks, but it continues to demonstrate leadership in the booming AI chip market. 10 stocks we like better than Taiwan Semiconductor Manufacturing › Artificial intelligence (AI) is a game-changing technology, where the right stocks could earn investors handsome gains. But as with any technology that comes along, investors will need to watch for companies that fail to live up to the hype. This is where following the stock picks of billionaire investors could prove very helpful. These investors have had successful investing careers, and they generally don't invest in a company until they have completed exhaustive research into its competitive position, risks, and return prospects. Fortunately, billionaire fund managers are required to report their holdings on Form 13F every quarter. The latest round of 13Fs revealed prominent billionaires still buying shares of two high-flying chip stocks in the first quarter. Taiwan Semiconductor Manufacturing (NYSE: TSM) is the leading chip manufacturer in the world. It controls more than 60% of the global foundry market, as it makes chips for leading chip companies, including Nvidia (NASDAQ: NVDA). Growing demand for chips used for AI workloads in data centers has helped send the stock up 279% over the past five years, and its run may not be over. Three notable billionaires were buying shares in the first quarter. David Tepper of Appaloosa Management, Stephen Mandel of Lone Pine Capital, and Chase Coleman of Tiger Global Management were adding to their firm's stakes. The company's strong first quarter amid uncertainty over the economy is pointing to tremendous momentum in the AI market. Demand for AI chips remained robust in the first quarter. Revenue and earnings grew 35% and 60% year over year, and TSMC is making significant investments in expanding capacity to support long-term demand. TSMC recently unveiled its A14 logic process technology, representing a step forward from its current 2-nanometer (N2) process. The A14 delivers a 15% increase in performance with a 30% power savings over the N2 and is scheduled to enter production in 2028. These billionaires are making a bet that TSMC is benefiting from sustainable demand in the AI market. They are obviously aware of the semiconductor industry's historical cyclicality, and some of that cyclical nature revealed itself last quarter, as not all the markets that TSMC sells into are experiencing strong demand right now. For example, seasonal softness in smartphone demand caused TSMC's revenue to fall 5% over the previous quarter. It also experienced a small setback in chip production following a recent earthquake that disrupted operations. Over the long term, the increasing use of more technologically advanced devices and data centers for AI should create opportunity for TSMC. The growing need for more advanced chips is why the stock has delivered market-beating returns over the last decade, and it could repeat that performance. TSMC forecasts AI chip sales to double in 2025 and grow at an annualized rate of 40% through 2028. Considering this forecast, the stock looks compelling, trading at a reasonable 21 times this year's earnings estimate, while analysts expect earnings to grow at an annualized rate of 21%. TSMC's long-term outlook for AI chip sales bodes well for Nvidia. Its graphics processing units (GPUs) are the gold standard in the AI chip market. The stock has rocketed 1,400% over the past five years, yet a few billionaires still see upsides. In the first quarter, Chase Coleman added to his firm's stake, while Daniel Loeb of Third Point established a new position in the stock. Nvidia is coming off an incredible year, where its revenue more than doubled to $130 billion. Based on a strong outlook for Nvidia's new chips going into production, analysts expect the company's revenue to increase by 53% to nearly $200 billion in the current fiscal year. Its new Blackwell computing platform designed for the most advanced AI workloads is already raking in billions in revenue, and the company is racing to raise supply to meet demand. Even Nvidia's automotive chips for self-driving cars are seeing strong demand, with revenue expected to triple this year to $5 billion. One risk for Nvidia is companies pursuing cheaper alternatives than buying its GPUs. Some of Nvidia's customers, including Amazon and Alphabet's Google, have invested in their own chips for AI. Custom chip solutions can perform more efficiently at specific computing tasks and save money over Nvidia's general-purpose GPUs that can cost tens of thousands of dollars per unit. Coleman and Loeb are obviously betting that data centers will continue to need Nvidia's GPUs. With Nvidia's software, companies can tailor these GPUs to work with a number of use cases. Nvidia just made a flurry of announcements at the recent Computex conference that show its GPU technology becoming more entrenched in companies' AI investment plans. For example, Nvidia and Microsoft are working together on agentic AI, an advanced form of AI that can make decisions without a human prompt. Perhaps the most important announcement from Nvidia was the introduction of NVLink Fusion, which will allow customers to integrate chips from other chipmakers alongside Nvidia's GPUs in data centers. This strategy could ultimately expand the addressable market for Nvidia's chips, while protecting its lead in the AI market. Despite these positive developments, the stock trades at a forward price-to-earnings ratio of 30, which seems on the low side for a company that analysts expect to grow earnings at a 35% annualized rate. Given Nvidia's lead in GPUs, the stock could hit new highs this year and still deliver market-beating returns over the next few years. Before you buy stock in Taiwan Semiconductor Manufacturing, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Taiwan Semiconductor Manufacturing wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $644,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $807,814!* Now, it's worth noting Stock Advisor's total average return is 962% — a market-crushing outperformance compared to 169% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. These AI Stocks Soared 270% to 1,400% in 5 Years, but Billionaires Keep Buying was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
23-05-2025
- Business
- Globe and Mail
These AI Stocks Soared 270% to 1,400% in 5 Years, but Billionaires Keep Buying
Artificial intelligence (AI) is a game-changing technology, where the right stocks could earn investors handsome gains. But as with any technology that comes along, investors will need to watch for companies that fail to live up to the hype. This is where following the stock picks of billionaire investors could prove very helpful. These investors have had successful investing careers, and they generally don't invest in a company until they have completed exhaustive research into its competitive position, risks, and return prospects. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Fortunately, billionaire fund managers are required to report their holdings on Form 13F every quarter. The latest round of 13Fs revealed prominent billionaires still buying shares of two high-flying chip stocks in the first quarter. 1. Taiwan Semiconductor Manufacturing Taiwan Semiconductor Manufacturing (NYSE: TSM) is the leading chip manufacturer in the world. It controls more than 60% of the global foundry market, as it makes chips for leading chip companies, including Nvidia (NASDAQ: NVDA). Growing demand for chips used for AI workloads in data centers has helped send the stock up 279% over the past five years, and its run may not be over. Three notable billionaires were buying shares in the first quarter. David Tepper of Appaloosa Management, Stephen Mandel of Lone Pine Capital, and Chase Coleman of Tiger Global Management were adding to their firm's stakes. The company's strong first quarter amid uncertainty over the economy is pointing to tremendous momentum in the AI market. Demand for AI chips remained robust in the first quarter. Revenue and earnings grew 35% and 60% year over year, and TSMC is making significant investments in expanding capacity to support long-term demand. TSMC recently unveiled its A14 logic process technology, representing a step forward from its current 2-nanometer (N2) process. The A14 delivers a 15% increase in performance with a 30% power savings over the N2 and is scheduled to enter production in 2028. These billionaires are making a bet that TSMC is benefiting from sustainable demand in the AI market. They are obviously aware of the semiconductor industry 's historical cyclicality, and some of that cyclical nature revealed itself last quarter, as not all the markets that TSMC sells into are experiencing strong demand right now. For example, seasonal softness in smartphone demand caused TSMC's revenue to fall 5% over the previous quarter. It also experienced a small setback in chip production following a recent earthquake that disrupted operations. Over the long term, the increasing use of more technologically advanced devices and data centers for AI should create opportunity for TSMC. The growing need for more advanced chips is why the stock has delivered market-beating returns over the last decade, and it could repeat that performance. TSMC forecasts AI chip sales to double in 2025 and grow at an annualized rate of 40% through 2028. Considering this forecast, the stock looks compelling, trading at a reasonable 21 times this year's earnings estimate, while analysts expect earnings to grow at an annualized rate of 21%. 2. Nvidia TSMC's long-term outlook for AI chip sales bodes well for Nvidia. Its graphics processing units (GPUs) are the gold standard in the AI chip market. The stock has rocketed 1,400% over the past five years, yet a few billionaires still see upsides. In the first quarter, Chase Coleman added to his firm's stake, while Daniel Loeb of Third Point established a new position in the stock. Nvidia is coming off an incredible year, where its revenue more than doubled to $130 billion. Based on a strong outlook for Nvidia's new chips going into production, analysts expect the company's revenue to increase by 53% to nearly $200 billion in the current fiscal year. Its new Blackwell computing platform designed for the most advanced AI workloads is already raking in billions in revenue, and the company is racing to raise supply to meet demand. Even Nvidia's automotive chips for self-driving cars are seeing strong demand, with revenue expected to triple this year to $5 billion. One risk for Nvidia is companies pursuing cheaper alternatives than buying its GPUs. Some of Nvidia's customers, including Amazon and Alphabet 's Google, have invested in their own chips for AI. Custom chip solutions can perform more efficiently at specific computing tasks and save money over Nvidia's general-purpose GPUs that can cost tens of thousands of dollars per unit. Coleman and Loeb are obviously betting that data centers will continue to need Nvidia's GPUs. With Nvidia's software, companies can tailor these GPUs to work with a number of use cases. Nvidia just made a flurry of announcements at the recent Computex conference that show its GPU technology becoming more entrenched in companies' AI investment plans. For example, Nvidia and Microsoft are working together on agentic AI, an advanced form of AI that can make decisions without a human prompt. Perhaps the most important announcement from Nvidia was the introduction of NVLink Fusion, which will allow customers to integrate chips from other chipmakers alongside Nvidia's GPUs in data centers. This strategy could ultimately expand the addressable market for Nvidia's chips, while protecting its lead in the AI market. Despite these positive developments, the stock trades at a forward price-to-earnings ratio of 30, which seems on the low side for a company that analysts expect to grow earnings at a 35% annualized rate. Given Nvidia's lead in GPUs, the stock could hit new highs this year and still deliver market-beating returns over the next few years. Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now? Before you buy stock in Taiwan Semiconductor Manufacturing, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $644,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $807,814!* Now, it's worth noting Stock Advisor 's total average return is962% — a market-crushing outperformance compared to169%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Globe and Mail
22-05-2025
- Business
- Globe and Mail
2 "Magnificent Seven" Stocks Billionaires Are Buying
The " Magnificent Seven" includes some of the most profitable and dominant tech companies in the world. These are financially strong companies with a long history of delivering market-beating returns for shareholders, which is why they have earned the label "magnificent." The most recent quarterly Form 13Fs revealed two notable fund managers buying more shares of Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN) in the first quarter. Let's explore why these billionaires may favor these stocks in 2025. 1. Microsoft One of the most widely held stocks by investment managers is Microsoft. Billionaires Stephen Mandel of Lone Pine Capital and Chase Coleman of Tiger Global Management have held large stakes in Microsoft for several years, and both investors were buying more shares in the first quarter. One reason that may explain why billionaire fund managers like Microsoft right now is the momentum in the company's cloud computing business. Revenue from Microsoft Azure grew 33% year over year in the first quarter, accelerating over the prior quarter's 31% growth rate. "We continue to see strong demand for our cloud and AI offerings as they help customers drive productivity, increase efficiencies, and grow their businesses," Microsoft CFO Amy Hood said. Microsoft Azure is one of the top cloud services providers, and it is building a solid competitive advantage. It continues to expand its data center capacity worldwide. This is helping Azure offer superior regional availability for companies using popular enterprise software vendors like Oracle and SAP. Microsoft has certainly lived up to its label as a Magnificent Seven stock. Its dominance in the software market with Windows and Office has made it one of the most profitable companies in the world, and its growth opportunity in cloud services points to a bright future. Over the last five years, its revenue and earnings per share have roughly doubled, sending its stock higher. However, Microsoft will need to prove to investors that it can translate booming demand for cloud services into higher profits down the road. The capital required to build these data centers has weighed on the company's margins and earnings growth over the past year. On that note, Microsoft came through last quarter, delivering year-over-year earnings growth of 18%. The stock traded as low as 26 times this year's earnings during Q1, when Lone Pine Capital and Tiger Global may have been buying shares. The current forward earnings multiple of 34 is at the high end of the stock's previous trading history. Investors may want to wait for a better price before opening a position. But more results like Microsoft posted last quarter could support new highs. 2. Amazon Stephen Mandel and Chase Coleman also bought more shares of Microsoft's competitor in the cloud market. Amazon dominates the e-commerce market while also operating the leading cloud business with Amazon Web Services. There are a few reasons why these investors like Amazon. Like Microsoft, Amazon Web Services (AWS) has seen strong demand for cloud services. Revenue from AWS accelerated over the past year and grew 17% year over year in Q1. AWS is now generating trailing-12-month revenue of $112 billion, or 19% of Amazon's business. Demand for AI-related services has been growing at triple-digit rates. Amazon is leading the cloud market for similar reasons to why it dominates the U.S. e-commerce market. It is focused on making AI more affordable for businesses by offering its proprietary AI chips, such as Trainium3, that help reduce costs. It also offers tools for building AI applications, such as Amazon Bedrock. Perhaps the most important reason billionaires are buying Amazon shares is that it is growing profits at high rates. Amazon's earnings per share grew 62% year over year in Q1. This primarily reflects cost-saving measures, such as the use of robotics in warehouses to streamline Amazon's retail operation. Amazon has a strong competitive advantage based on over 200 million Prime members, a delivery network, and data center infrastructure to support growing cloud demand. While Microsoft Azure is growing faster than Amazon Web Services, the cloud market is growing around 20% year over year. The insatiable demand for AI services is a rising tide that can lift all boats. On the basis of Amazon's operating cash flow, the stock is trading at a multiple of 19, which is at the lower end of Amazon's trading history. Barring a sudden downturn in the stock market, investors should expect Amazon's stock to deliver solid returns in 2025 and beyond. Should you invest $1,000 in Microsoft right now? Before you buy stock in Microsoft, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Microsoft wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $644,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $807,814!* Now, it's worth noting Stock Advisor 's total average return is962% — a market-crushing outperformance compared to169%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Microsoft, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
