Investors often look to billionaires for inspiration because they have demonstrated their investing strengths over many years. And one in particular who has drawn attention is Stanley Druckenmiller. Throughout his 30-year career at Duquesne Capital Management, this top investor produced a 30% average annual return -- and this, without any money-losing years.
Druckenmiller retired years ago and is now head of the Duquesne Family Office, where he oversees $5.2 billion in 13F securities. What's a 13F? Managers of more than $100 million must report their moves to the Securities and Exchange Commission every quarter on this form. This offers us a glimpse into their investment strategies.
And this brings me to Druckenmiller's latest actions in the second quarter. The investing giant dumped Broadcom (AVGO +0.32%), Intel (INTC +2.61%), and Micron Technology (INTC +2.61%) for the following chip stock. Here's why.
Image source: Getty Images.
Roles in the AI space
So, first, a quick note on Broadcom, Intel, and Micron. They each play roles in the booming artificial intelligence (AI) space. Broadcom makes routers and switches as well as custom AI chips, and this has helped revenue jump in recent quarters. Chip giant Intel fell behind early in the AI race, but the company has proven itself to be an interesting recovery story in recent times. The company's leadership in the central processing unit (CPU) market has helped, as these chips are seen as playing an important role in the era of agentic AI. Micron's business is booming amid enormous demand for memory chips -- in fact, demand is so high that it's created a tight supply situation, and memory prices have soared. All of this has boosted revenue at Micron.
The performance of these three stocks reflects their successes, though Broadcom has lost some momentum in recent months.
Now, let's consider the moves Druckenmiller made in the second quarter:
- He closed out his positions in Broadcom, Intel, and Micron. These previously represented 1.8%, 0.5%, and 0.2% of his portfolio, respectively.
- Druckenmiller opened a position in chip designer Advanced Micro Devices (AMD +2.49%). He bought 72,900 shares, and AMD now represents 0.8% of his portfolio.
Druckenmiller hasn't offered an explanation for the move, but a close look at today's AI market may help explain it. Though Broadcom, Intel, and Micron are well-positioned to benefit from AI moving forward, AMD may offer a particularly interesting opportunity. As a leader in the CPU market and a company making important progress in the GPU market, AMD is prompting investors to sit up and take notice.
NASDAQ: AMD
Key Data Points
The importance of the CPU
CPUs may not have been a big focus in the earliest days of AI, but today they are emerging as an essential player -- this is because the CPU powers agentic AI, or an AI agent as it considers a problem and takes steps to solve it. And agentic AI is seen as the next big area of growth.
Nvidia still dominates in the GPU market, and this is likely to continue, but AMD has greatly increased its data center offerings -- and it's seeing success, with revenue soaring. Meanwhile, since AMD's data center revenue is significantly lower than that of Nvidia -- at $6.7 billion versus $89 billion -- AMD clearly has more room for growth.
All of these elements may have prompted Druckenmiller to lock in gains on certain AI stocks and shift his investment into AMD, to benefit as demand for CPUs intensifies and data center revenue takes off.
Is AMD the right investment for you? In my opinion, AMD, trading at 66x forward earnings estimates, looks a bit pricey at the moment, so it probably isn't the best time to buy if you focus on value. But it's clear that AMD is on track to play a big role in the AI story, particularly as the use of AI agents increases, and this makes the stock a fantastic one to put on your watch list and potentially buy on the dip.
