Finance

Forget Nvidia: Billionaires are selling it and buying two top artificial intelligence (AI) stocks


chip manufacturer Nvidia (Nasdaq: NVDA) Nvidia has created significant shareholder value in recent months. The stock has soared 517% since the start of 2023 as interest in artificial intelligence (AI) surges. But several billionaire hedge fund managers sold off Nvidia positions in the fourth quarter while buying shares of other companies’ artificial intelligence stocks.

  • Millennium Management’s Israel Englander sold 1.7 million Nvidia shares, reducing his holdings by 45%.

  • Point72 Asset Management’s Steven Cohen sold 1.1 million Nvidia shares, reducing his holdings by 66%.

  • Appaloosa’s David Tepper sold 235,000 Nvidia shares, reducing his stake by 23%.

These three billionaires have two important things in common: They rank among the 15 most successful hedge fund managers of all time, and they beat S&P 500 Index (SNPINDEX:^GSPC) Those qualities have given them credibility over the past three years.

With this in mind, three hedge fund managers are buying Amazon (NASDAQ: AMZN) In the fourth quarter, England and Tepper also started. pivot point (NYSE:HUBS)These companies already have a strong presence in some AI markets—Amazon in cloud AI developer services, HubSpot in AI sales assistant software—but both companies are leaning toward AI product development to Create more shareholder value.

1. Amazon

Amazon has three important growth engines in e-commerce, digital advertising and cloud computing, and the company has strong positions in all three markets. Specifically, Amazon operates the world’s most visited online marketplace, naturally making it the world’s largest retail advertiser.Meanwhile, Amazon Web Services (AWS) is a leader in cloud infrastructure and platform services and multiple subcategories, including AI (artificial intelligence) developer services.

Amazon is relying on artificial intelligence to improve its position in these three markets.it recently launched generative artificial intelligence A shopping assistant called Rufus, which uses machine learning to optimize inventory and delivery routes for its logistics operations. Amazon has also launched generative artificial intelligence tools to create marketing content for advertisers, and the company continues to tweak its machine learning models to make product recommendations more relevant.

Finally, AWS is making its cloud platform more compelling with two new products: Bedrock, a service for customizing large language models and building generative AI applications, and Amazon Q, a generative AI business Assistant to query and summarize data from a variety of internal and external sources. CEO Andy Jassy believes that generative artificial intelligence alone can “generate tens of billions of dollars in revenue for Amazon over the next few years.”

Amazon announced strong financial results for the fourth quarter, with revenue growing 14% to $170 billion. Operating margins expanded for the seventh consecutive quarter. Non-GAAP diluted net income per share increased to $1.00, a year-on-year increase from the previous year. After $0.03 per share.

Looking ahead, Amazon is likely to achieve double-digit sales growth by the end of the decade. I said that because retail e-commerce sales are expected to grow at 8% per year, the digital advertising market is expected to expand at 15% per year, and the cloud computing market is expected to grow at 14% per year through 2030.

Wall Street analysts have similar expectations. The consensus is that Amazon will grow sales by 11% annually over the next five years. This makes its current valuation of 3.3 times sales seem reasonable. Investors should consider buying a small position in the stock today, especially as part of a larger basket of artificial intelligence stocks.

2.HubSpot

HubSpot specializes in customer relationship management (CRM) software. Its platform includes applications for marketing, sales, customer service and operations teams, as well as tools for commerce and content management. These products help businesses generate leads, convert leads into customers, and maintain lasting relationships with those customers.

HubSpot designed its CRM platform with small and medium-sized businesses in mind. Customers in this underserved segment find its user-friendly interface, simple software and freemium pricing attractive. As a result, HubSpot has achieved strong presence in multiple product categories, especially sales and marketing software. really, Morningstar Corporation Consider HubSpot a leader in both areas and in IT consulting Gartner Corporation Recently recognized its leadership in marketing automation software, it highlighted investments in artificial intelligence as a key differentiator.

HubSpot reported solid fourth-quarter financials, beating both revenue and profit expectations. Its number of customers grew 23% to 205,000, while average subscription revenue per customer increased 1 percentage point. Accordingly, revenue grew by 24%, net profit reached US$582 million due to particularly strong software sales, and non-GAAP net profit increased by 53% to US$98 million.

Going forward, HubSpot aims to drive adoption of higher-end products by adding more sophisticated features and attracting larger enterprises. To achieve this goal, the company will launch a series of artificial intelligence features in the first half of this year, most of which will be exclusive. These features include predictive artificial intelligence for sales forecasting and content recommendations, as well as for marketing copy and content. Generative artificial intelligence for abstracts.

Wall Street expects HubSpot’s sales to grow 17% annually over the next five years, but there’s still room to rise in that estimate. HubSpot is a proven leader in AI-powered sales assistant software for small businesses, and continued investment in AI could serve as a powerful growth driver. Still, even if Wall Street consensus is correct, the current valuation of 14.4x sales seems reasonable. of. Now is a good time for long-term investors to take a small position in this growth stock.

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John Mackey is the former CEO of Amazon subsidiary Whole Foods Market and a board member of The Motley Fool. Trevor Janewin The Motley Fool has positions at Amazon and Nvidia. The Motley Fool has positions and recommendations at Amazon, HubSpot, and Nvidia. Motley Fool at disclosure policy.

Forget Nvidia: Billionaires are selling it and buying two top artificial intelligence (AI) stocks Originally published by The Motley Fool



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