Wealthy Individuals are Offloading Nvidia Shares and Investing in These Two Artificial Intelligence (AI) Shares Alternatively

Wealthy Individuals are Offloading Nvidia Shares and Investing in These Two Artificial Intelligence (AI) Shares Alternatively

Thus far, Nvidia has been among the primary beneficiaries of the artificial intelligence (AI) expansion. Shares soared by 173% within the past year, as the firm reported unprecedented demand for its graphics processing units (GPUs) or chips, which power the most advanced AI systems.

However, some billionaire hedge fund chiefs lessened their stakes in Nvidia during the first quarter, simultaneously investing in two other AI-related stocks: Amazon (AMZN 1.80%) and Salesforce (CRM 0.68%).

• Israel Englander of Millennium Management disposed of 720,004 shares of Nvidia stock, reducing his stake by 35%. In contrast, he amplified his presence in Amazon and Salesforce by 32% and 36%, respectively. These stocks represent his largest and 12th-largest holdings, respectively, excluding options.
• Louis Bacon of Moore Capital Management sold 2,006 shares of Nvidia, causing a 19% reduction in his stake. Additionally, he increased his stake in Amazon by 18% and launched a new position in Salesforce. These stocks now rank as his largest and sixth-largest holdings, respectively, excluding options.
• Philippe Laffont of Coatue Management disposed of 2,937,060 shares of Nvidia stock, diminishing his stake by 68%. Meanwhile, he amplified his position in Amazon by 3% and doubled his stake in Salesforce. These stocks now represent his second- and fourth-largest holdings, respectively.

Investors need not perceive these trades as a negative indication regarding Nvidia's potential. All three hedge fund managers still maintain an investment in the chipmaker. However, Amazon and Salesforce warrant further examination. Here's what you should know.

1. Amazon

Amazon is the dominant online marketplace in North America and Western Europe in terms of gross merchandise sales. Its success in retail has enabled it to establish a flourishing digital advertising business. Amazon is the biggest retail media company in the United States and the third-largest adtech company worldwide. Furthermore, Amazon Web Services (AWS) leads the market in cloud infrastructure and platform services revenue.

Amazon utilizes AI to generate profit opportunities and enhance operational efficiency across its multiple business divisions. In e-commerce, it recently introduced a generative AI shopping assistant called Rufus that assists consumers in locating and contrasting products. Amazon also debuted a generative AI assistant for sellers that simplifies the creation of product pages. Lastly, the company employs AI in its logistics business to manage inventory and optimize delivery routes.

In advertising, Amazon employs machine learning to ensure consumers view the most relevant advertisements. This ultimately translates into more successful campaigns for marketers, boosting Amazon's appeal as an advertising partner. Amazon has also introduced a generative AI tool that allows brands to transform product profile photos into lifestyle images.

In cloud computing, AWS is already well-positioned to reap the benefits of AI given its leadership in cloud infrastructure and platform services, but the company has also launched new products. Amazon Bedrock is a cloud service that enables brands to customize pre-trained large language models and build generative AI applications. Amazon Q is a conversational assistant that can summarize information and automate tasks such as coding.

Analysts on Wall Street anticipate Amazon to increase earnings per share at 24% annually during the next three to five years. At its current valuation of 50 times earnings, this consensus estimate renders its valuation relatively affordable. In fact, Amazon is trading near its least expensive earnings multiple in two years. I would feel confident purchasing this AI stock today and believe that patient investors should consider doing the same.

2. Salesforce

Salesforce is the market leader in customer relationship management (CRM) software, and its market share surpasses that of its four closest competitors combined. Its platform brings together productivity applications for sales, customer service, marketing, and commerce. Salesforce will undoubtedly benefit from increasing core CRM spending, but two new products broaden its addressable opportunities in the adjoining markets of data management and automation.

First, Data Cloud consolidates customer data from internal and external sources, enabling users to automate workflows, personalize the customer experience, and create AI applications. Salesforce CEO Marc Benioff claims that Data Cloud is the fastest-growing product in the company's history.

Second, Einstein Copilot is a natural language interface that leverages generative AI to automate tasks across the CRM platform. For instance, Einstein can summarize information and present relevant insights to sales and customer service teams. It can also aid commerce teams in creating digital storefronts and help marketing teams produce advertising campaigns.

CRM spending is projected to grow at a 13.9% annual rate through 2030, according to Grand View Research. Salesforce should benefit from this trend, but especially as Data Cloud and Einstein Copilot add value to existing products and generate cross-selling opportunities for the company. Benioff even suggested that "Data Cloud will become the heart and soul" of the Salesforce CRM platform as businesses invest in AI because AI must be rooted in accurate data to be effective.

Analysts on Wall Street expect Salesforce to grow earnings per share at 21% annually during the next three to five years. At its current valuation of 64.8 times earnings, this makes its valuation appear quite expensive. While Salesforce may surpass analysts' growth expectations, I would urge waiting for a cheaper valuation multiple before investing in this stock.

1. Given the billionaire hedge fund managers' shift in investing from Nvidia to Amazon and Salesforce, it could be worth exploring the potential of these companies, especially Amazon, in the finance and investing sphere. With its dominance in retail, digital advertising, and cloud services, Amazon is leveraging AI to generate profit opportunities and enhance operational efficiency across various business divisions.
2. In light of the fund managers' investments, Salesforce, as a market leader in CRM software, might also be an intriguing option for those interested in AI-related stocks. Salesforce's Data Cloud and Einstein Copilot aim to automate workflows, personalize the customer experience, and create AI applications, which could significantly contribute to the company's growth in the coming years.

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