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Premier chipmaker Nvidia has been on a streak this year due to the artificial intelligence boom, but not all of its investors are fully buying into the hype.
Stanley Druckenmiller said he cut his stake in the company earlier this year after its “stock went from $150 to $900,” during an appearance on CNBC’s Squawk Box on Tuesday. He added that he cut his Nvidia investment and other positions in late March because he needed “a break” and most of “what we recognized has become recognized by the marketplace now.”
The billionaire investor said he found Nvidia in 2022 through a young partner at his firm, Duquesne Family Office, who thought hype around AI would surpass that for the blockchain.
“I didn’t even know how to spell it,” he said. “I bought it. Then a month later ChatGPT happened. Even an old guy like me could figure out okay, what that meant, so I increased the position substantially.”
Nvidia exceeded analyst expectations in February, reporting revenues of $22 billion in its fourth quarter — up nearly 270% from the previous year. The chipmaker’s highly desired H100 GPUs, or graphics processing units, have propelled the company to success amid a race to develop powerful generative AI models, and it became the first chipmaker to reach a $2 trillion valuation in February. Nvidia counts Microsoft and Meta as its top customers.
“So AI might be a little overhyped now, but underhyped long term,” Druckenmiller said. “AI could rhyme with the Internet. As we go through all this capital spending we need to do the payoff while it’s incrementally coming in by the day. The big payoff might be four to five years from now.”
Other skeptics have warned AI is another tech bubble ready to burst, with one economist saying earlier this year the AI craze has companies even “more overvalued” than internet companies in the dot-com bubble of the 1990s. However, analysts previously told Quartz the two bubbles are different.