Stanley Druckenmiller has a knack for identifying global investing trends. When he finds something interesting, the billionaire investor isn't afraid to bet big on it.
Such was the case in late 2022, when he started buying a huge stake in Nvidia as OpenAI launched ChatGPT. By the next summer he had accumulated over 950,000 shares of the leading AI stock, and it accounted for 14% of the portfolio held his Duquesne Family Office.
But by last fall, Druckenmiller had completely sold his Nvidia shares and bought competing chipmaker Broadcom instead. He quickly sold those shares as well, and ended 2024 without either of the two largest AI chipmakers in his portfolio.
He's now turned his attention and capital to another artificial intelligence stock that looks like a spectacular investment opportunity at its current price.
Image source: Getty Images.
Why Druckenmiller sold the big chipmakers
Druckenmiller's decision to sell both Nvidia and Broadcom appears to have been motivated by just one thing: valuation. In an interview with CNBC last May, he said "AI might be a little over-hyped now." Nvidia shares had climbed over 600% from his initial purchase by the end of the first quarter last year, climbing 82% in the first three months of 2024 alone.
Even as Nvidia was blowing away earnings expectations, Druckenmiller felt, at that point, something probably had to give going forward. Even a slight disappointment from Nvidia could send the shares crashing given its valuation and expectations for the company.
NASDAQ: NVDA
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When he shifted some capital to Broadcom, it came as more attention was moving to custom silicon solutions for the hyperscale cloud providers. Broadcom CEO Hock Tan put a huge spotlight on that opportunity during the company's fourth-quarter earnings call in December. He announced that the company is working with two new hyperscalers in addition to three existing customers for custom AI accelerators and suggested the market for Broadcom's AI chips could reach $90 billion by 2027.
That sent shares to a new all-time high, and Broadcom's valuation climbed much higher as a result. Druckenmiller took the quick win, and decided to redeploy capital elsewhere.
It's worth noting that Druckenmiller later said it was a mistake to sell Nvidia as early as he did. He remains extremely bullish on artificial intelligence in the long run and suggested he'd buy shares again if they came down in price. That might mean he's buying Nvidia stock during the current sell off, but we'll have to wait until May to find out.
For now, we know there's one AI stock he's bought to take advantage of the growing industry.
Here's the top AI stock the billionaire is buying
Druckenmiller bought several stocks in the fourth quarter, many of which provide essential hardware, software, and platforms for the development and use of artificial intelligence. His biggest investment, though, was in Amazon (AMZN +1.79%). The billionaire bought over 72,000 shares of the company, accounting for roughly 1.9% of his public portfolio as of the end of the year.
Amazon Web Services, or AWS, is Amazon's cloud computing business. It's the largest of the public cloud platforms, giving Amazon a considerable advantage when it comes to building and selling AI services for enterprises and developers. While more and more companies are using a hybrid or multi-cloud approach, few want to migrate their systems to a new cloud platform. That makes it much easier for Amazon to sell AI services into its large existing customer base.
NASDAQ: AMZN
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Of course, Amazon isn't standing still when it comes to building out AI capabilities for AWS. It's investing heavily in its own AI training and inference chips, its own large language models, a platform to develop applications using frontier models, and even a service that helps developers build a new large language model from the ground up.
Most importantly, it's investing billions in adding more infrastructure and compute capacity for its customers. The company plans to spend over $100 billion in capital investments this year, largely related to building out new data centers. CEO Andy Jassy said during the company's fourth-quarter earnings call that Amazon wouldn't be investing so much if it didn't see "significant signals of demand." He also mentioned the business would be growing faster if it weren't for existing constraints on its capacity.
It's also worth noting that Amazon is also home to an increasingly profitable retail business. Advancements in AI have helped improve everything in that business ranging from the user experience and recommendations to optimizing its logistics network.
Amazon shares climbed considerably higher in the fourth quarter and the start of 2025. But the stock has come down closer to levels seen in October of last year. At this point, the stock trades for an enterprise value-to-sales ratio right around its 10-year average of 3.2 despite becoming increasingly profitable and generating tens of billions in free cash flow. That looks like a great value for the stock, and it wouldn't be a surprise if Druckenmiller continues adding to his position.
