Billionaires are (still) buying and selling shares of these two hypergrowth stocks

While all eyes were on the July inflation report, investors may have missed what can be described as the most important data release of the quarter on August 14. I’m talking about the filing date for institutional investor reports. Form 13F with the Securities and Exchange Commission (SEC).

A 13F is a snapshot that details the buying and selling activity of Wall Street’s brightest money managers during the most recent quarter. While 13Fs offer a snapshot that is no more than 45 days old when filed with the SEC, they can still provide important clues about the stocks, industries, sectors, and trends (cough, artificial intelligence (AI), cough) that have caught the attention of top asset managers.

Even as investors are enamored with the prospects of AI and its seemingly limitless ceiling, the hardware pillar of the AI ​​revolution, the semiconductor colossus Nvidia (NASDAQ: NVDA)is a stock that billionaires can’t help but sell.

More than a half-dozen billionaires dumped Nvidia shares for a third straight quarter

Based on the latest set of 13Fs detailing trading activity during the quarter ended June, we found Seven Billionaires Send Nvidia Stock to the Wallincluding (total shares sold in parentheses):

• Ken Griffin of Citadel Advisors (9,282,018 shares)

• David Tepper of Appaloosa (3,730,000 shares)

• Stanley Druckenmiller of Duquesne Family Office (1,545,370 shares)

• Cliff Asness of AQR Capital Management (1,360,215 shares)

• Israel Englander of Millennium Management (676,242 shares)

• Steven Cohen of Point72 Asset Management (409,042 shares)

• Philippe Laffont of Coatue Management (96,963 shares)

What’s particularly notable about the sale is that it marks the third consecutive quarter in which more than a half-dozen billionaire asset managers have reduced their stakes in Nvidia.

On the one hand, it can be argued that the continued selling is due to profit-taking. Nvidia shares have climbed more than 700% since the beginning of 2023, which equates to a $2.7 trillion increase in market capitalization. No market leader has ever seen its value increase so quickly before.

But there are a number of logical reasons beyond simple profit-taking that can explain this continued selling by billionaire investors.

History has been particularly unkind to major innovations. No breakthrough technology has escaped a tech bubble in its early stages in the last 30 years. Moreover, investors consistently overestimate how quickly a new technology will be adopted and mature. All of this suggests that one day the AI ​​bubble will burst.

Nvidia will also face competitive pressure. While its graphics processing units (GPUs) are likely to maintain their compute advantage in AI-accelerated data centers, Nvidia’s inability to meet overwhelming demand, coupled with lower prices from its competitors, should allow its rivals to gain market share.

Finally, Nvidia would have to execute perfectly for this…