Billionaire Peter Thiel is best known for his role in co-founding Palantir Technologies. But he also runs the hedge fund Thiel Macro, which made three interesting trades in the third quarter:
- Thiel Macro sold 100% of its stake in Nvidia (NVDA +1.14%).
- It sold 76% of its stake in Tesla (TSLA 2.62%).
- Finally, it started a position in Microsoft (MSFT 2.28%).
The new position in Microsoft is particularly interesting. It accounts for 34% of the hedge fund's invested assets despite returning about 483,000% since its IPO in March 1986. In other words, Microsoft has already been an extraordinary winner, but Thiel is evidently confident it will continue winning from here.
Here's what investors should know about Nvidia, Tesla, and Microsoft.
Image source: Getty Images.
1. Nvidia
Nvidia is well known for its best-in-class graphics processing units (GPUs), chips used to speed up compute-intensive data center workloads like artificial intelligence (AI) training and inference. However, the company is truly formidable due to its full-stack strategy that spans adjacent hardware (like CPUs and networking) and software development tools.
NASDAQ: NVDA
Key Data Points
Why did Thiel exit his position in Nvidia during the third quarter? I would hazard a guess at competition from Broadcom and Marvell Technology, companies that designed custom AI chips for Alphabet and Amazon, respectively. However, custom AI chips are unlikely to put a major dent in Nvidia's dominance -- the company controls more than 80% of the AI accelerator market -- because the total cost of operations is often higher.
Additionally, Thiel may have been concerned about export restrictions, which have stopped Nvidia from selling its chips in China, the second-largest artificial intelligence market in the world. However, President Trump recently said Nvidia could sell its H200 GPUs in China, which could be a material (and unexpected) catalyst for the company.
Personally, I think Thiel sold Nvidia too early. Wall Street expects adjusted earnings to grow at 67% annually through fiscal 2027 (ends in January). That makes the current valuation of 46 times earnings look rather cheap, especially when Nvidia beat the consensus earnings estimate by 3% during the last six quarters. I think patient investors should consider buying (not selling) at the current price.
2. Tesla
Tesla has struggled with various headwinds in recent years, including high interest rates and consumer backlash to Elon Musk's political activities. In turn, while global electric car sales increased 33% during the year that ended in October 2025, Tesla's revenue declined, and its market share dropped 5 percentage points. The company also ceded its status as the market leader to Chinese automaker BYD, and I doubt Tesla will ever regain its lead.
However, the investment thesis for Tesla primarily centers around autonomous driving and humanoid robotics. Its vision-only robotaxis (i.e., self-driving cars that navigate based on vision inputs alone, rather than using cameras, radar, and lidar like Waymo) are not only more cost-efficient, but also should scale more quickly because Tesla doesn't need to build detailed maps of each city before commencing operations.
Currently, Tesla robotaxis are limited to San Francisco and Austin, despite Musk saying the company would serve "half the population of the U.S." by the end of 2025. However, Tesla plans to enter five more U.S. cities -- Dallas, Houston, Las Vegas, Miami, and Phoenix -- in the near future, and Morgan Stanley analysts see the company as the technology leader in a market that could approach $4 trillion by 2040.
Importantly, while Peter Thiel sold Tesla in the third quarter, it remains his largest holding. Wall Street expects adjusted earnings to grow at 8% annually through 2026, which makes the current valuation of 235 times earnings look absurdly expensive. But Tesla is best viewed as a very long-term investment (i.e., 10 years to 15 years) because it will take time for autonomous vehicles and robots to become major facets of daily life.
NASDAQ: MSFT
Key Data Points
3. Microsoft
Microsoft is leaning on its status as the largest enterprise software company in the world to monetize artificial intelligence. It has added generative AI copilots to its office productivity, cybersecurity, enterprise resource planning, and low-code development software suites. Monthly active users reached 150 million in the September quarter, up from 100 million in the June quarter, according to CEO Satya Nadella.
Additionally, Microsoft Azure is also the second-largest cloud provider as measured by infrastructure and platform services sales. The company has gained about 3 percentage points of market share since ChatGPT launched in late 2022 despite compute capacity constraints. However, Microsoft is adding data center capacity rapidly, and Morgan Stanley's latest CIO Survey ranks Azure as the cloud provider most likely to gain share over the next three years.
Wall Street estimates Microsoft's adjusted earnings will increase at 16% annually through the fiscal year ending in June 2027. That makes the current valuation of 33 times earnings look somewhat expensive. But Microsoft topped the consensus earnings estimate by an average of 8% in the last four quarters, which makes the current price more reasonable.
