10 AI Stock Picks and Performance of Billionaire Stanley Druckenmiller

Billionaire Stanley Druckenmiller has been bullish on AI since before ChatGPT launched. He is one of the most closely followed macro investors on Wall Street. He averaged about 30% a year at Duquesne Capital with no losing year, and his 1992 bet against the British pound made more than $1 billion.

Druckenmiller’s AI Stock Picks Take a Beating

The AI trade has taken a turn for the worse since the end of the second quarter. Nine of Stanley Druckenmiller’s 10 AI stock picks on this list have declined since June 30, with the stocks losing an average of 27.8% on an equal-weight basis through November 9, compared with a gain of about 0.8% for the SPDR S&P 500 ETF Trust (SPY). We have included each stock’s performance since June 30 in the list below.

But did Druckenmiller get out before the crash? We could find out in just a few days, when his family office is expected to disclose its third-quarter holdings. The filing will reveal whether he sold or reduced positions before the latest AI selloff, or held on to stocks that subsequently suffered steep losses.

To find out what Druckenmiller bought and sold, follow Stanley Druckenmiller’s page on our website and sign up for email notifications. You’ll receive an alert the next time we publish an article about his investments.

Why He Bought Nvidia Before the AI Boom

Druckenmiller told CNBC in May 2024 that his young partner urged him in 2022 to buy Nvidia. He bought it, and a month later ChatGPT launched, so he raised the position substantially. He cut the stake in late March 2024 after a huge run, and he said he is not Warren Buffett and does not hold stocks for 20 years. He called AI a little over-hyped in the short term and under-hyped in the long term.

Speaking of Buffett, we ranked the Berkshire Hathaway holdings with the most room to rise in our list of the 10 best Warren Buffett stocks with upside potential.

Is AI a Bubble? What Druckenmiller Has Said

Druckenmiller has called AI real from the start. In a June 2023 Bloomberg interview, he said AI is real, unlike crypto. He said real secular shifts do not move in 10 months, and that the internet bubble lasted about two and a half years. He wanted to own Nvidia for at least two to three years.

By May 2024, his tone had changed. He told CNBC that AI could be a little over-hyped now and under-hyped in the long term. He compared it to the internet in 1999, when someone who bought the Nasdaq watched it fall 80% before the internet’s payoff arrived. He said history could rhyme, and the big payoff from all the AI spending might be four to five years away.

What He Says About AI, Jobs and Inflation

In a Morgan Stanley interview recorded in January, Druckenmiller pointed out that people called every past technology revolution the end of jobs, all the way back to the horse and buggy. He gave radiologists as an example. Machines read prostate cancer pathology as well as or better than humans, but there are more radiologists today than ten years ago, because they now spend their time with patients. He also warned that AI could turn inflationary if governments answer job losses by printing money.

Methodology

Duquesne Family Office’s second-quarter 13F showed he is still buying AI stocks. In this list, we rank ten of those stocks by the value of Druckenmiller’s stake at the end of the second quarter, from lowest to highest. For each stock, we track its performance this year through November 9, measured from its January 2 close. We also calculated the returns since June 30th.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter strategy selects 14 small-cap and large-cap stocks every quarter and has returned 612% since May 2014, beating its benchmark by 375 percentage points (see more details here).

You can see the full list of AI stocks in Druckenmiller’s portfolio in our video by clicking the image below:

#10 Lam Research (NASDAQ:LRCX)

Druckenmiller Stake as of Q2: $18.9 Million

Year to Date Performance (through November 9): +19%

Return since June 30th: -48.9%

Lam Research makes the machines that chip makers use to build chips on silicon wafers, so every chip maker on this list depends on its equipment. Druckenmiller opened this position in the second quarter by buying 43,600 shares.

Lam gains from AI spending whichever chip maker wins, because it sells equipment to every major one. AI is driving a long memory boom, and chip makers need more equipment to meet that demand. Lam is at the center of it, with record sales and profit margins at all-time highs. Management expects the chip equipment market to keep growing into 2027, led by memory. Lam also plans to return most of its free cash flow to shareholders.

Supply is the main risk. Management sounded cautious about parts shortages and a lack of clean room space at chip makers, which can limit how fast customers add equipment. The stock fell after its latest report despite strong results. Sales to China are also expected to drop. The stock trades above its own historical valuation, which leaves little room for a slowdown in AI spending.

Lam Research’s profit grew strongly over the past year, but its cash from operations fell, which leaves less money for dividends and buybacks if the trend continues. Check the full valuation analysis here.

#9 Rambus (NASDAQ:RMBS)

Druckenmiller Stake as of Q2: $23.0 Million

Year to Date Performance (through November 9): -18%

Return since June 30th: -39.2%

Rambus makes memory interface chips. These chips sit next to the memory in AI servers and control how data moves between the memory and the processor. Druckenmiller opened this position in the second quarter by buying 173,000 shares.

Every AI server needs memory, so Rambus’s sales and profits keep growing. It has no long-term debt, a large cash pile and extra inventory to meet rising demand. Management expects data center demand to strengthen into 2027.

The stock fell after its latest report even though results and the forecast beat estimates, most likely because expectations were high and AI spending worries are hitting chip stocks. Bears point to slipping profit margins and rivals selling similar parts. Rambus also gains less from AI than memory makers such as Micron, since its chips are not scarce.

Rambus earns lower margins on its chips than on its licensing business, so faster chip growth can pull its overall profit margins down. Read the full breakdown here.

#8 Palo Alto Networks (NASDAQ:PANW)

Druckenmiller Stake as of Q2: $39.8 Million

Year to Date Performance (through November 9): +84%

Return since June 30th: -3%

Palo Alto Networks sells cybersecurity software and firewalls to companies. Companies now put AI agents inside their systems, and every agent adds another entry point that needs protection. Druckenmiller opened this position in the second quarter by buying 116,650 shares.

Bulls say AI is pushing security to the top of every company’s priority list, because each AI agent that connects to company systems is another entry point to protect. Identity security is becoming the control layer for those agents, and CyberArk gives Palo Alto a leading position there.

Bears acknowledge the critical role Palo Alto plays in AI security, but they point to valuation. The stock trades at 75 times expected earnings, against a sector median of 19.6 and its own five-year average of 59. Most of its recent revenue jump came from acquisitions, and organic growth is still about 15%. The deals also added about 19% more shares, so earnings growth is guided at just 9% in fiscal 2027.

Part of Palo Alto’s revenue growth came from acquisitions such as CyberArk, which also added shares, and its guidance points to earnings per share growth of only about 8% to 9% in fiscal 2027. See how the valuation holds up.