While there is no shortage of information on Wall Street, perhaps no data release is more impactful than the quarterly report. Form 13Fs.

A 13F is a required filing with the Securities and Exchange Commission for institutional investors with at least $100 million in assets under management. It’s a tool that allows investors to see which stocks Wall Street’s smartest money managers are buying and selling.

While Warren Buffet Berkshire Hathaway like that 13F filing investors expect top numbers every quarterThe Oracle of Omaha isn’t the only billionaire investor making waves on Wall Street.

Image source: Getty Images.

For example, billionaire Ken Griffin of Citadel is another Wall Street success story that investors pay close attention to. Although Citadel hedges its common stock holdings through frequent put and call options, as well as short held option contracts that do not appear in the 13F, it is still one of the most anticipated 13Fs each quarter.

In the quarter ending in late June, Citadel’s hedge fund made a series of eye-opening moves during Wall Street’s hottest period. artificial intelligence (AI) stocks.

Griffin’s Citadel joins shares of AI standouts Palantir and Broadcom

It’s easy to see why top asset managers are intrigued by the AI ​​revolution. The ability of AI-powered software and systems to become more proficient at the tasks assigned to them and even learn new tasks without human intervention enables this technology to be used in almost every industry on the planet. That’s why analysts at PwC We expect artificial intelligence to add $15.7 trillion to the world economy by 2030.

With the understanding that Citadel’s hedge fund hedged its positions with options contracts, 13F shows it owns shares of the AI-powered data mining specialist Palantir Technologies (PLTR 4.49%) and artificial intelligence network solutions giant broadcom (AVGO -0.09%) there was increased by 1,140% and 64% respectively in the end-June quarter.

Aside from their consistent double-digit sales growth, perhaps their best selling feature is that they are irreplaceable.

Palantir has two primary operating divisions: Gotham and Foundry. The first is an AI-powered platform that collects data and helps plan and execute missions for federal governments. Foundry, meanwhile, is an artificial intelligence and machine learning (ML)-driven platform that helps businesses make sense of copious amounts of data to streamline their operations. No company at scale comes close to delivering what Palantir canprovides a degree of security to cash flow.

Broadcom’s networking solutions in comparison AI-accelerated data centers become top choice. The Jericho3-AI fabric can connect up to 32,000 graphics processing units (GPUs) to maximize computing potential and reduce queuing latency, which is critical when split-second decision making is required.

Equally important, neither company’s operations are entirely reliant on AI. Although Palantir Technologies incorporates artificial intelligence and machine learning into its Gotham and Foundry platforms, it is not a pure AI company. For example, if an AI bubble forms and bursts, demand for Palantir’s services will not disappear or decrease in any way.

Similar things can be said for Broadcom. Although AI has played a significant role in recent sales growth, there’s much more to this company than AI networking solutions. For example, Broadcom is a major provider of wireless chips and accessories for smartphones. It is also a supplier of optical components used in industrial equipment and offers cyber security solutions.

But Citadel’s brightest investment minds weren’t buyers of all AI stocks in the second quarter.

Image source: Getty Images.

Ken Griffin’s fund sells 79% of its shares in Wall Street’s darling AI

While most AI stocks are flying, Griffin’s fund slashed 79% of its stake in Wall Street’s most valuable companyAs of the closing bell on November 8, Nvidia (NVDA -0.84%). Once again, I want to emphasize that Citadel hedges its positions with put and call options and may have other hedges that are not published in the 13F.

Nvidia has reached over $3 trillion in market value since the beginning of 2023, and investors don’t need to do much research to understand why. Although it has other built-in pipelines, including virtualization software as well as GPUs used in gaming and cryptocurrency mining, the lion’s share of Nvidia’s sales growth is due to its AI-GPUs.

According to TechInsights’ estimates, Nvidia accounted for 98% of GPUs shipped to data centers in 2022 and 2023, and it doesn’t look like it will give up much of its market share this year either. Orders for the company’s flagship H100 and its successor, the Blackwell GPU, are piling up. gave the company extraordinary pricing power.

But beyond simple profit-making, there are several valid reasons that may have encouraged Griffin and his team to reduce their collective stake in Nvidia.

As I suggested before, History is Nvidia’s greatest potential enemy. For at least 30 years, there has been no next big innovation or technology that could prevent the bubble from bursting in the first place. The simple fact that most businesses don’t have a clear plan or direction for their AI investments is a glaring warning that AI lacks the utility to support Nvidia’s near-parabolic rise.

Griffin and his advisors may also be concerned about increased competition from all angles for Nvidia. While most investors are probably focused on competitors Advanced Micro Devices Ramping up AI-GPU production and introducing new chips, the bigger concern may just be domestic competition. The majority of Nvidia’s largest customers by net sales are developing AI-GPUs internally for data centers. Even if Nvidia’s GPUs retain their computing advantage, may still lose valuable data center real estate.

Insider trading activity is another potential red flag for Nvidia’s shares. While not all inside sales activity indicates a problem, There have been no open market purchases of Nvidia shares by insiders in almost four years. If company executives and managers don’t see value in Nvidia’s shares, why should Citadel’s investment team?

Suffice to say, Nvidia has a lot to prove at its current valuation.