Artificial intelligence (AI) is one of the hottest investing themes on the planet right now, thanks to this technology's potential to revolutionize how business is done -- and your daily life. Investors big and small have been buying AI stocks like hotcakes over the past year, and top AI tech players have helped the S&P 500 soar to records over and over ever since.
If you haven't yet gotten in on AI stocks or are looking to add to your current AI positions, you may be wondering which companies to choose at this point. It's often a good idea to look to billionaire investors for some inspiration, as they have a solid track record of success when it comes to choosing quality long-term investments.
This doesn't mean you should follow their every move -- your comfort with risk or your investing horizon may differ from theirs, for example. And billionaire investors don't agree with each other on every buy and sell.
But in recent times, certain billionaires have seen eye-to-eye on three top AI players and loaded up on them in the second quarter. Bridgewater Associates' Ray Dalio, Citadel's Ken Griffin, and Tudor Investment's Paul Tudor Jones all bought these three stocks hand over first. Are they good buys for you? Let's find out.
1. Nvidia
Nvidia (NASDAQ: NVDA) has become almost synonymous with AI in recent times. The company is the world's No. 1 AI chipmaker, and this dominance and its broad offerings of AI products and services has grown earnings in the triple digits quarter after quarter. And this has helped the stock price to climb more than 200% over the past year.
Billionaires clearly believe Nvidia's gains are far from over. Bridgewater's Dalio increased his position by 831% to 6,556,193 shares in the second quarter; Citadel's Griffin lifted his position by 107% to 2,421,072 shares; and Tudor Investment's Tudor Jones increased his holdings by 853% to 273,294 shares.
Considering Nvidia's current market position, as well as the company's focus on innovation -- it's pledged to update its chips annually -- and the general forecast for an AI market of $1 trillion by 2030, the company could have plenty of new waves of growth ahead. And more growth could be just around the corner, as Nvidia is about to launch its new Blackwell architecture by the end of the year.
All of this makes this top AI company a great buy for these billionaires -- and it could make a solid long-term addition to your portfolio, too.
2. Amazon
You may think of e-commerce first when you think of Amazon (NASDAQ: AMZN), but the company actually is a leader in the AI market, too. Amazon uses AI to help gain in efficiency across its e-commerce business, and it also is a seller of AI through its Amazon Web Services (AWS) unit.
AWS has gone all-in on AI, offering its customers products and services to suit every AI need, which has helped AWS reach an annualized revenue run rate of more than $105 billion. The cloud computing business is Amazon's profit driver, so this performance is excellent news for the company.
Certain billionaires are optimistic about Amazon's future, as we can see from their second-quarter investments. Dalio lifted his Amazon holdings by 153% to 2,645,567 shares; Griffin raised his Amazon stake by 17% to 7,692,857 shares; and Tudor Jones boosted his holdings by 28% to 336,407 shares.
Amazon is the ideal investment for investors who want to get in on the AI theme, but want to minimize their risk. This is because Amazon doesn't rely on AI for growth -- the company's e-commerce and cloud computing businesses generated billion-dollar sales prior to the AI boom, establishing a solid track record of strength. And the company's focus on AI these days offers an additional opportunity for growth.
3. Super Micro Computer
Super Micro Computer (NASDAQ: SMCI) is a behind-the-scenes winner in the AI world. The company makes servers, workstations, and other products that power AI data centers. Supermicro works closely with top chip designers like Nvidia so it can immediately integrate their innovations in its equipment -- and this speed to market appeals to AI customers.
The company has generated triple-digit revenue growth in recent quarters, and moving forward, it could see a new wave of growth thanks to its specialization in direct liquid-cooling technology -- something that should solve the big problem of heat buildup in AI data centers.
Dalio opened a new position in Supermicro, buying 15,777 shares in the second quarter; Tudor Jones did the same, buying 26,165 shares; and Griffin lifted his holdings by 96% to 201,733 shares.
Is Supermicro right for you too? This depends on your comfort with risk. Supermicro encountered headwinds recently: A short report back in August alleged troubles at the company, and a few weeks later, The Wall Street Journal reported a possible Justice Department probe into Supermicro. Investors may be seeking further clarification, and this could weigh on the stock in the near term -- so you should only consider this AI stock today if you're an aggressive investor.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.
Billionaires Are Buying These 3 Top Artificial Intelligence (AI) Stocks Hand Over Fist was originally published by The Motley Fool