Someone who is passionate about artificial intelligence (AI). Nvidia ( NVDA 1.40% ) Recently, the chipmaker has delivered exceptional profits to its shareholders, to the extent that it decided to conduct a 10-for-1 stock split in June in order to manage its rapidly increasing share price.
However, the hedge fund managers mentioned below reduced their investments in Nvidia during the second quarter and redirected their earnings into other opportunities. Broadcom ( AVGO -0.25% ) , a different semiconductor company that has just finished a stock split where each share was divided into 10 shares.
- Israel Englander, the founder of Millennium Management, decreased his ownership in Nvidia by selling 676,242 shares, resulting in a 5% reduction in his stake. Simultaneously, he raised his stake in Broadcom by 55%, now ranking it as his eighth-largest holding, not including options.
- Ken Griffin from Citadel Advisors sold 9.2 million Nvidia shares, decreasing his ownership by 79%. At the same time, he boosted his ownership in Broadcom by 64%, making it his 10th biggest investment, excluding options.
- David Shaw, from the company D.E. Shaw & Co., recently sold 12.1 million shares of Nvidia, resulting in a 52% decrease in his ownership. At the same time, he boosted his ownership in Broadcom by 229%, making it his seventh-largest investment.
The trio of financial managers lead the top-performing hedge funds based on net profits from the beginning, making the transactions conducted by Englander, Griffin, and Shaw significant. Below are the key points investors should be aware of regarding Nvidia and Broadcom.
Nvidia: The artificial intelligence stock that billionaires were selling after the stock split.
Nvidia processing units mainly used for graphics tasks are considered the best choice in fast computing, a field that combines custom hardware and software to enhance the performance of demanding tasks such as 3D graphics. Applications of artificial intelligence Nvidia dominates the market with over 95% share in workstation graphics processors and over 90% share in data center GPUs. Notably, the company is responsible for over 80% of AI chip sales at present.
Nvidia has achieved significant success largely because of its strong software ecosystem. The CUDA platform offers a wide array of software libraries that simplify the process of model training and application development in various fields like scientific computing and data science. The process of enabling computers to learn and improve from experience without being explicitly programmed. For nearly twenty years, the CUDA ecosystem has been evolving, establishing Nvidia GPUs as the preferred choice for developers creating accelerated computing applications, particularly in the realm of artificial intelligence.
According to Angelo Zino from CFRA, Nvidia is predicted to have a significant impact on society in the next ten years. Interestingly, although two hedge fund managers reduced their investments in Nvidia in the second quarter, they still hold significant stakes in the company. Nvidia is a major holding in Israel Englander’s portfolio, ranking fifth excluding options, and is the third-largest position in David Shaw’s portfolio.
Nvidia’s stock may experience fluctuations in the short run due to its upcoming earnings report on August 28 and the reported delay of Blackwell GPU shipments for three months. These chips are known for their significantly faster performance. AI training and inference In contrast to the earlier Hopper design, the upcoming release is anticipated to be available later this year. The management is expected to address this matter during the earnings call, and the stock price may experience significant fluctuations based on the discussion.
Nevertheless, Blackwell GPUs will be released in due course, and Nvidia is in a prime position to gain from the increase in AI investments by businesses. Analysts predict a 37% annual growth in earnings for the next three years, which makes the current price-to-earnings ratio of 73 seem fairly justified. These projections… The PEG ratio, which stands for price/earnings-to-growth ratio. The number 2 is significantly lower than the three-year average of 3.1.
For those looking to invest in Nvidia, it is advisable to initiate a small position in the stock now. In the event that the stock price drops after the company announces its earnings this month, it might be a good opportunity to purchase additional shares.
Broadcom was the popular choice among AI stock billionaires for its stock split.
Broadcom divides its operations into semiconductor solutions and infrastructure software. The company holds a prominent position in both sectors. In the semiconductor solutions segment, Broadcom leads the market in networking chips and application-specific integrated circuits (ASICs), which are customized chips designed for specific applications such as artificial intelligence (AI).
In the realm of infrastructure software, VMware, a subsidiary of Broadcom, holds the top position in server virtualization software and hyperconverged infrastructure. Hyperconverged infrastructure is a concept that involves software-defined platforms merging virtualized computing, storage, and networking to enable businesses to maximize the efficiency of their physical infrastructure. Forrester Research is a company that specializes in providing research and advisory services for businesses in various industries. The company has been acknowledged as a top player in software for managing cloud expenses.
Broadcom’s leadership in networking chips is expected to drive monetization of AI, while its strong position in ASICs could provide significant momentum. Despite ASICs accounting for less than 10% of AI chips at present, Morgan Stanley believes that the percentage could reach 30% within a span of five years. This prediction suggests that ASICs are expected to gain a larger market share in AI computing at the expense of GPUs. Goldman Sachs Analysts have recently stated that they consider Broadcom to be an essential component, along with Nvidia, in the continuous development of AI infrastructure.
In the future, Wall Street anticipates Broadcom’s growth. Non-GAAP refers to financial measures that do not follow the generally accepted accounting principles. The projected growth rate for earnings per share is 21% per year until 2026. This forecast suggests that the current valuation of 37.8 times non-GAAP earnings is justified. Investors willing to wait should think about buying a small amount of shares in this semiconductor company now.
