Billionaires Shift Love from NVIDIA to AVGO
When people think of the leading AI stock, $NVIDIA Corp(NVDA)$ often comes to mind. But recent 13F filings show billionaires are offloading NVIDIA stock and are now betting big on $Broadcom(AVGO)$ , which they see as a more promising AI stock.
Billionaires Dump NVIDIA for 3 Quarters
In Q2, seven billionaires reduced their NVIDIA holdings:
Why the sell-off?
Likely reasons include profit-taking and portfolio diversification.
NVIDIA's market value surged by $2.75 trillion since early 2023, driven by its H100 GPUs becoming a standard for AI data centers and its impressive pricing power. Enterprise demand for AI-Gpus far exceeds supply.
But billionaires might be worried about several factors. One big concern is increasing competition. AMD is ramping up production of its MI300X AI GPUs and doesn’t face the same production constraints as NVIDIA. $Advanced Micro Devices(AMD)$ 's chips are priced between $10,000 and $15,000, much cheaper than NVIDIA's $30,000 to $40,000 H100s.
Moreover, NVIDIA’s top clients— $Microsoft(MSFT)$ $Meta Platforms, Inc.(META)$ $Amazon.com(AMZN)$ $Alphabet(GOOG)$ $Alphabet(GOOGL)$—are starting to develop their own AI GPUs.
There’s also fear of an AI bubble burst, as history shows that overhyped innovations often lead to bubble crashes. AI’s lack of a clear, profitable business model could mean NVIDIA might suffer if the AI bubble bursts.
Billionaires Love New AI Stocks
While selling NVIDIA, seven billionaires bought shares in Broadcom in Q2:
NVIDIA's hardware is key for high-performance computing, but Broadcom is establishing itself as a major player in AI networking solutions. For instance, its Jericho3-AI network chip connects up to 32,000 GPUs, aiming to reduce network latency and maximize chip performance.
Billionaires might prefer Broadcom not just for AI but for its diversified revenue streams, making it more resilient to an AI bubble burst. Broadcom leads in wireless chips and accessories for smartphones and offers network solutions, security, and financial software.
The company also expands through acquisitions, like the $69 billion purchase of $VMware(VMW)$ last November, boosting its presence in private and hybrid cloud sectors.
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