In this article, we will take a look at the 10 AI stocks billionaires are loading up on. To see more such companies, go directly to 5 AI Stocks Billionaires are Loading Up On.
The AI mania is quickly dividing the market into two halves, those who believe we are in an AI bubble that will not live up to the hype and all the stocks gaining on the back of the AI hype will soon come crashing down, and those who say this time it’s different and companies that are investing in AI products and services will keep enjoying huge gains in the future. AI skeptics believe they’ve seen it before. In 2010, when it was reported that IBM’s Watson system is smart and intelligent enough to beat humans at a quiz, International Business Machines Corp. (NYSE:IBM) shares enjoyed a huge rally. Companies working in neural networks, machine learning, and deep learning domains have also seen similar rallies in the past, only to see their valuations go through correction when investors became realistic and rational.
The dramatic gains a handful of companies made over the past few months on the back of their AI claims are causing some valuation-related worries in the market. NVIDIA Corporation (NASDAQ:NVDA) recently saw a huge rally after the company gave strong guidance on the back of GPU demand growth caused by the deployment of ChatGPT-like apps. But would it be still wise to invest in NVIDIA Corporation (NASDAQ:NVDA)? Recently, many analysts shared their opinion that the stock is already reflecting the AI opportunity the company enjoys. Some notable investors also decided to take some profits after the latest rally. For example, Edmond de Rothschild Asset Management, which had a huge position in NVIDIA Corporation (NASDAQ:NVDA) since 2020, recently sold a significant portfolio of its stake in the company, according to Bloomberg. The reason was obviously valuation, as the firm’s global chief investment officer Benjamin Melman told Bloomberg:
“Would we add to AI tech? We’re less and less sure on that as valuations are too lofty. If the gains continue, we’ll be even more cautious.”
C3.ai, Inc. (NYSE:AI) could be another example for things to come for AI investors. Over the past few years, the company has changed its name and business line multiple times. It has tried its luck in energy (it was once C3 Energy) and Internet of Things (its previous name was C3 IoT) industries. In 2019 it changed its name to C3.ai, Inc. (NYSE:AI). Its name and ticker “AI” proved to be a gold mine as the stock saw a huge rally this year thanks to the AI boom. It has gained about 220% year to date through June 8. But when C3.ai, Inc. (NYSE:AI) recently posted earnings results and gave disappointing guidance, the stock fell.
Interestingly, the debate around whether or not we are in an AI bubble is also dividing billionaires into two camps.
Billionaire Ken Griffin, who has a net worth of over $32 billion, recently shared some interesting thoughts during an event for his hedge fund’s new class of interns event in Florida. While the billionaire agrees AI advances will be consequential and affect several facets of our economy, he believes the hype is overblown when it comes to short-term implications.
“I do think the AI community is making a terrible mistake by being full of hype on the near-term implications of generative AI. I think they’re actually doing everybody a huge disservice with the level of hype they are creating.”
The billionaire also shared his thoughts on the threat AI poses to jobs.
“If you listen to the CEOs of tech companies, it’s going to eliminate millions of white-collar jobs. I say, ‘Not that fast.’ Some professions are accepting of errors, but you have to be really accurate in finance. You have to be really accurate as a lawyer.”
Interestingly, though, Griffin believes generative AI will change the computer programming industry.
“Programing is going be a big target for generative AI. You want to make sure that if you are a software engineer, you are putting yourself really close to the domain problems that need to be solved. Your career path will be defined by your ability to solve problems. The days of ‘I’m a good programmer’ are becoming numbered.”
Billionaire Stanley Druckenmiller also has some interesting thoughts on AI and his stance is in line with AI enthusiasts as the billionaire is adjusting his portfolio to focus on AI companies. Druckenmiller’s fund upped its stake in NVIDIA Corporation (NASDAQ:NVDA) by 36% in the first quarter, ending the period with a $220 million stake.
At a recent Bloomberg Invest conference, the billionaire reiterated his bullish take on NVIDIA Corporation (NASDAQ:NVDA) and said that “Nvidia is something we’re going to want to own for at least two or three years, not for 10 months.”
Druckenmiller believes NVIDIA Corporation (NASDAQ:NVDA) is a good choice for the long term even if the company faces some short-term headwinds.
Our Methodology
For this article, we used Insider Monkey’s database of stock holdings of billionaires and picked 10 AI stocks with the highest number of billionaire investors as of the first quarter of 2023.
AI Stocks Billionaires are Loading Up On
10. C3.ai, Inc. (NYSE:AI)
Number of Billionaire Investors: 8
Perhaps having AI as your stock ticker and AI in your company name is the best way to achieve huge gains in the stock market in 2023? That was true for C3.ai, Inc. (NYSE:AI) until recently when the company revealed its guidance which disappointed investors and the stock fell about 20%. Nevertheless, C3.ai, Inc. (NYSE:AI) shares have gained about 229% year to date as of June 8. C3.ai, Inc. (NYSE:AI) provides AI-related enterprise applications.
For FY’24 C3.ai, Inc. (NYSE:AI) expects its revenue to come in the range of $295 million – $320 million, compared with $315.37 million consensus. Insider Monkey’s database shows that 8 billionaires had stakes in C3.ai, Inc. (NYSE:AI) as of the end of the first quarter. The most notable of them are Philippe Laffont, D. E. Shaw, and Ken Griffin.
Overall, 24 hedge funds tracked by Insider Monkey were long C3.ai, Inc. (NYSE:AI) as of the end of the first quarter.
Kerrisdale Capital made the following comment about C3.ai, Inc. (NYSE:AI) in the investor letter:
“We are short shares of C3.ai, Inc. (NYSE:AI), a $4 billion market capitalization enterprise software company that has risen from the ashes of its busted IPO based on the misconception that its self-proclaimed “AI leadership” somehow positions it to benefit from Silicon Valley’s current tech theme du jour: generative AI as represented by media obsession ChatGPT. We believe these speculative flames won’t burn bright much longer, as the realities of C3’s poor customer traction, failing sales partnerships, and financial pressures will catalyze what is likely to be a painful reality check.
This isn’t the first time C3 has sought to ride a hot investment theme. The company was originally founded as C3 Energy to develop analytics solutions for public utilities preparing for the emergence of cap-and-trade and smart grids. C3 pivoted in 2016, renaming the company C3 IoT to capitalize on that buzzy opportunity. But management’s master stroke was rebranding operations as C3.ai in 2019 and going public with the “AI” stock ticker, thus securing its place as the default artificial intelligence stock play for the undiscriminating investor despite the bulk of its business coming from relatively dated analytics models built for a very small number of utility, energy, and government customers. C3 is a minor, cash-burning consulting and services business masquerading as a software company, and its true value is a fraction of its current market capitalization…” (Click here to read the full text)
9. International Business Machines Corp. (NYSE:IBM)
Number of Billionaire Investors: 12
Earlier this year International Business Machines Corp. (NYSE:IBM) revealed its generative AI platform called Watsonx, a new AI and data platform. International Business Machines Corp. (NYSE:IBM) will allow companies to make foundation models to deploy AI, handle and manage related data and data warehouses.
As of the end of the March quarter, 12 billionaires in Insider Monkey’s database had stakes in International Business Machines Corp. (NYSE:IBM). Some famous billionaires invested in International Business Machines Corp. (NYSE:IBM) include Cliff Asness, DE Shaw, Ken Griffin, and Steve Cohen.
8. Adobe Inc. (NASDAQ:ADBE)
Number of Billionaire Investors: 18
Adobe Inc. (NASDAQ:ADBE) is continuing to launch AI features for the general public. Earlier this year Adobe Inc. (NASDAQ:ADBE) rolled out some AI features for its flagship PhotoShop platform. Recently, it revealed its generative AI tool Sensei GenAI, across Adobe Experience Cloud applications for enterprises.
Year to date Adobe Inc. (NASDAQ:ADBE) has gained about 24% through June 8. As of the end of the first quarter of 2023, 18 billionaires in Insider Monkey’s database had stakes in Adobe Inc. (NASDAQ:ADBE). Some famous billionaires having stakes in Adobe Inc. (NASDAQ:ADBE) are Ken Griffin, Philippe Laffont, Rajiv Jain and D. E. Shaw.
Polen Focus Growth Strategy made the following comment about Adobe Inc. (NASDAQ:ADBE) in its Q1 2023 investor letter:
“One area we are watching regarding Alphabet and Adobe Inc. (NASDAQ:ADBE) is AI systems and their capabilities, including generative AI. Interestingly, both Adobe and Alphabet could see benefits or threats from the emergence of generative AI and large language models (LLMs). Both companies already use generative AI to the benefit of their users in anticipating how content creators edit their work (Adobe) and in how search results are anticipated and generated (Google). At the same time, breakthrough technologies like AI can open the door to additional competition and/or impact a company’s profitability levels. We now see AI systems others are developing, including LLMs and generative AI offerings, that could be more competitive in the future. While we think it remains early days for ChatGPT and the capabilities of these types of LLMs and generative AI programs like DALL-E, the technology seems to be progressing at a fast rate and will at least require a strong response from incumbents.
As of now, we believe Alphabet and Adobe are leaders in their own right in these areas and have a clear path to improving their existing offerings with AI advancements, which would allow them to be net beneficiaries of AI. There are also significant barriers to building leading AI offerings in these areas. As a result, our position sizes in Adobe and Alphabet remain sizeable. For Adobe, the status of its pending $20 billion-plus Figma acquisition is also uncertain. There is a good chance, in our view, that it will be blocked by regulators, which would mean the future opportunity to expand its offerings to the developer community (beyond designers) may not occur.”
7. NVIDIA Corporation (NASDAQ:NVDA)
Number of Billionaire Investors: 22
The reason why NVIDIA Corporation (NASDAQ:NVDA) is the center of the AI talk these days is simple: NVIDIA Corporation (NASDAQ:NVDA) makes chips that power AI applications like ChatGPT. So far, NVIDIA Corporation (NASDAQ:NVDA) has no major competitor. Given this leverage and first-mover advantage, NVIDIA Corporation (NASDAQ:NVDA) has ample time and resources to further boost its dominance in the industry.
Recently, at a conference, billionaire Stanley Druckenmiller said he’d want to own NVIDIA Corporation (NASDAQ:NVDA) for at least “two or three years, not for ten months, and maybe longer”. 22 billionaires in Insider Monkey’s database have stakes in NVIDIA Corporation (NASDAQ:NVDA) as of the end of the March quarter.
Harding Loevner Global Equity Strategy made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2023 investor letter:
“It also signaled lower capital expenditures and increased share repurchases. Other tech companies, including Salesforce, similarly benefited from plans to lower costs and increase profitability. Meanwhile, NVIDIA Corporation (NASDAQ:NVDA), the graphic-chips designer, surged amid investor enthusiasm over the potential commercial applications of artificial-intelligence technologies, such as ChatGPT, which requires the use of many chips.”
6. Alibaba Group Holding Limited (NYSE:BABA)
Number of Billionaire Investors: 25
Alibaba Group Holding Limited (NYSE:BABA), like Amazon.com, Inc. (NASDAQ:AMZN), offers strong AI capabilities with its Cloud platform that helps developers make AI applications. Alibaba Group Holding Limited (NYSE:BABA) also revealed plans to launch its own large language model, “Tongyi Qianwen”, across several of its products and services.
Alibaba Group Holding Limited (NYSE:BABA) accounts for about 2.69% of the total portfolio of The Generative AI ETF (CHAT) by Roundhill Investments. Insider Monkey’s proprietary database shows that 25 billionaires were investing in the Chinese ecommerce giant as of the end of the March quarter. The total worth of stakes of these billionaires was $2.1 billion.
Harding Loevner Emerging Markets Equity Strategy made the following comment about Alibaba Group Holding Limited (NYSE:BABA) in its Q1 2023 investor letter:
“As Xi Jinping formally commenced his third term as president, Chinese officials asserted their support for the rapid development of the domestic tech sector and suggested that regulators may soften their stance toward the country’s internet giants. Meanwhile, Alibaba Group Holding Limited (NYSE:BABA) and JD.Com Inc. (NASDAQ:JD) both announced grand restructuring plans to spin off some business units into separate publicly traded entities, which the market applauded.”
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Disclosure: None. 10 AI Stocks Billionaires are Loading Up On is originally published on Insider Monkey.
