When you think of an artificial intelligence (AI) success story -- and one that's likely to continue -- you may think of Nvidia (NVDA 2.62%). That's because the company is the world's leading AI chip designer, and these chips as well as related products and services have helped earnings to skyrocket, reaching record levels. And since the AI market is projected to reach into the trillions of dollars in a few years, Nvidia surely has many more bright days ahead.
So, you might expect this stock to be a favorite among billionaire investors. But some billionaires actually have sold Nvidia in recent times, and others, regardless of their positions in Nvidia, clearly prefer another AI player right now. This company is one that sells AI products and services to customers and uses AI to advance its own business too. Today, this stock is among the top holdings of billionaires including Chase Coleman of Tiger Global Management, Philippe Laffont of Coatue Management, and Stephen Mandel Jr. of Lone Pine Capital. Let's check out this popular-with-billionaires AI player -- and consider if it may be right for you too.
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Should you follow the investing moves of billionaires?
First, though, a quick note about why it's interesting to watch the moves of billionaires. These investors have proved their investing abilities over time, generally choosing the right stocks at the right moments and selling for a profit. This doesn't mean we should follow their every decision -- certain may not be adapted to your strategy -- but others could be just right and significantly help you along the path to wealth. It's key to consider points such as risk and investment horizon before you decide whether to take the path of a particular billionaire at a particular moment.
So, which AI stock has attracted the attention of these expert investors in recent times? I'm talking about Amazon (AMZN -0.23%), a company that's heavily invested in AI but also already is benefiting from this investment. Let's check out its position in the portfolios of the billionaires I mentioned.
- Chase Coleman of Tiger Management in the first quarter slightly increased his position in Amazon, by 2.7%, to 6,588,488 shares. It's his fifth biggest position.
- Philippe Laffont of Coatue Management boosted his Amazon holding by 0.8% to 10,753,808 shares. It's his second biggest holding.
- Stephen Mandel Jr. of Lone Pine increased his Amazon position by nearly 15% to 4,352,740 shares. It's his third largest position.
The moves show these billionaires clearly believe that Amazon will benefit from the next stages of AI growth. As mentioned, Amazon has been a winner so far in the space -- in its e-commerce and cloud computing businesses. The company uses AI to gain efficiency in the e-commerce business -- for example, choosing the best delivery routes for packages or streamlining operations in its fulfillment centers. This has helped Amazon lower its cost to serve, and over time, this should further strengthen Amazon's already solid profitability.
A cloud computing AI winner
But where Amazon may truly score an AI win is in the area of cloud computing. The company's Amazon Web Services (AWS) offers customers a broad selection of AI products and services, from chips to a fully managed platform offering access to large language models -- and customers even can turn to AWS for help building AI agents. AWS, with its range of options, is ensuring that it will benefit from every stage of the AI growth story, suggesting that an investment now in this company could deliver returns for quite some time. In the recent quarter, AWS reached an annual revenue run rate of $117 billion thanks to its AI portfolio.
It's also important to remember that AWS, as the world's No. 1 cloud services provider, is well positioned to attract customers for its AI services -- many already are cloud customers, making it easy to use AI offerings there.
Billionaires are recognizing this and betting on Amazon in a big way -- but should you? What I like about Amazon is it's an appropriate investment for a broad range of investors, from those seeking growth to those seeking an element of safety. Amazon offers you strengths in the newish high-growth area of AI and is likely to be one of the biggest winners -- but at the same time offers you the security of a long track record of earnings growth and a strong moat, or competitive advantage. Amazon's brand and extensive fulfillment network make it very difficult for other retailers to unseat the company.
All of this means that, like the billionaires, you can choose Amazon for its potential to excel in the AI boom -- but also for its strong non-AI business that has proved itself over time.
