Billionaire Ken Griffin's Citadel Makes Major Shifts in AI Investments

GOP Megadonor Ken Griffin Slashes Citadel's Palantir Stake By 91%, Bets Big On Nvidia As Jensen Huang-Led Company Rises Over 180% In 2024 - NVIDIA (NASDAQ:NVDA), Apple (NASDAQ:AAPL)

Citadel cut its stake in Palantir by 91% in Q3.Citadel added 194% of Nvidia shares in Q3. GOP Megadonor Ken Griffin's fund Citadel Advisors LLC made a major shift within the AI-linked investment universe by slashing its stake in Palantir Technologies Inc. PLTR and more than tripling its stake in Nvidia Corp NVDA, as per its third quarter 13F filings with the SEC. Citadel Cuts Stake In Palantir Having been on both the NYSE and Nasdaq exchanges this year, Palantir's shares have risen by 298.37% year-to-date. This compares to 20% and 25% moves in the NYSE Composite and Nasdaq 100 Index, respectively, in the same period. Alex Karp-led company deals with providing access to artificial intelligence targeting tools to the government and military contracts. Knowing Palantir's business it's unlikely for the financial market participants to peg this company for having a vehement, meme-making fandom. However, its chief executive officer, Griffin-led fund - Citadel, has decisively cut its exposure to Palantir in the third quarter. The fund boosted its call positions by 91% and put positions by 55%, but significantly reduced its ownership from 5.68 million shares to 508,086 shares in the third quarter -- a 91% decline -- bringing the stake's value to $18,900 as of Sept. 30. Also read: JD Vance's Investment Playbook Has Bitcoin And ETFs: Here's What Else The VP-Elect Is Betting On Citadel Increase Stake In Nvidia Nvidia shares have also outperformed the Nasdaq 100 Index as it has zoomed by 181% on a year-to-date basis. It has also been in a tight race with Apple Inc AAPL in terms of market capitalization. While it has surpassed Apple's market cap earlier, at the time of the publication of this article Apple was ahead with a market cap of $3.551 trillion, while the Jensen Huang-led company stood at $3.314 trillion. Citadel, one of the largest funds in the U.S., holds positions across 14,115 companies with a total invested value of $518.2 billion. The fund increased its stake by 194% to 7.122 million shares amounting to $864.96 million in Nvidia during the third quarter. The AI industry's bellwether, Nvidia, under the leadership of Huang, has issued optimistic projections for the forthcoming quarter and fiscal year 2025. This positive outlook is underpinned by the escalating production of the Blackwell chip. Analyst Views On Palantir And Nvidia According to Benzinga pro data, Palantir has a consensus price target of $30.22 apiece based on the ratings of 18 analysts. The highest price target among all the analysts tracked by Benzinga is $75 issued by BofA Securities on Nov. 25, whereas the lowest price target is $7.5 issued by Wolfe Research on Aug. 8, 2023. The average price target of $63.67 between BofA Securities, Wedbush, and Goldman Sachs implies a 3.83% downside for Palantir. According to Benzinga pro data, Nvidia has a consensus price target of $170.56 apiece based on the ratings of 40 analysts. The highest price target among all the analysts tracked by Benzinga is $220 per share issued by Rosenblatt on Nov. 21, whereas the lowest price target is $120 apiece issued by New Street Research on Aug. 6. The average price target of $154.67 between DA Davidson, Phillip Securities, and Truist Securities implies a 13.74% upside for Nvidia. Read next: Michael Saylor's MicroStrategy Convertible Notes To Buy Bitcoin Offer No Interest, So Why Are Investors Rushing To Buy Them? Image via Shutterstock Market News and Data brought to you by Benzinga APIs

Billionaire Ken Griffin Sold 91% of Citadel's Stake in Palantir and Nearly Tripled His Position in This Cutting-Edge Artificial Intelligence (AI) Stock | The Motley Fool

Griffin's Citadel hedge fund made some big moves in the artificial intelligence (AI) arena during the September-ended quarter. This has been a busy month on the news front for Wall Street. Between Election Day, earnings season, and the October inflation report, investors haven't been hurting for catalysts. But among these various data releases, you might have missed what's arguably the most important of them all -- the Nov. 14 deadline to file Form 13F with the Securities and Exchange Commission for the September-ended quarter. A 13F is a required filing no later than 45 calendar days following the end to a quarter for institutional investors with at least $100 million in assets under management. These filings offer investors a concise snapshot of which stocks Wall Street's most-famous money managers have been buying and selling. Although investors eagerly wait for the curtain to lift on Warren Buffett's trading activity at Berkshire Hathaway, he's far from the only billionaire who's overseen big-time returns on Wall Street. For instance, investors also tend to pay close attention to Ken Griffin at Citadel, who oversees the most-profitable hedge fund since inception. Citadel operates an active fund that almost always hedges its common-stock position with put and call options, and may have other positions (short positions, as well as options held short) that don't show up in a 13F filing. But among the countless trades made by Griffin's hedge fund during the third quarter, two stand out. Arguably one of the hottest artificial intelligence (AI) stocks on the planet right now is cloud data-mining specialist Palantir Technologies (PLTR 1.69%). Shares of Palantir have skyrocketed by 791% on a trailing-two-year basis, as of this writing on Nov. 23, with the company's market cap briefly tipping the scales at $150 billion last week. Yet in spite of these otherworldly gains, billionaire Ken Griffin disposed of 91% of the Palantir common shares Citadel's hedge fund held during the September-ended quarter. There were also corresponding increases in put and call options held by Citadel for Palantir, which hedges against its common-stock position. Before digging into the catalysts that might coerce a billionaire money manager and their team to sell shares of Palantir, it's important to first understand the bull thesis. The wind in Palantir's sails is its irreplaceability at scale. The company's AI-inspired Gotham platform is used by federal governments to plan and execute missions, as well as gather copious amounts of data. Meanwhile, its AI- and machine learning-powered Foundry platform helps businesses make sense of their data. No other company comes close to offering the breadth of services that Palantir can, which leads to highly predictable operating cash flow quarter after quarter. The other catalyst for Palantir Technologies is its push to recurring profitability. Businesses with sustainable moats that demonstrate their ability to generate a profit are often rewarded with a hearty valuation premium by investors. On the flipside, valuation might be the biggest reason Ken Griffin, along with other billionaire money managers, sent shares of Palantir packing in the third quarter. As of the closing bell on Nov. 22, shares of the company were valued at more than 42 times Wall Street's consensus sales forecast for 2025, as well as 137 times projected earnings per share (EPS). Both levels are consistent with bubble-like valuations that won't be sustainable over the long run. Additionally, since Gotham can only be used by the U.S. government and its allies, there's a somewhat limited long-term opportunity for Palantir's core profit-driving operating segment. Although Foundry is growing like a weed, it's not yet the proven operating platform that Gotham is. More than likely, Palantir's near-parabolic increase in its share price won't be sustainable. Perhaps even more surprising than Griffin overseeing the sale of most of his hedge fund's common-stock stake in Palantir Technologies was witnessing he and his team reverse course on Wall Street's artificial intelligence darling Nvidia (NVDA 0.66%) during the September-ended quarter. After being a decisive seller of Nvidia stock during the second quarter, which is when Nvidia conducted its historic 10-for-1 stock split, Citadel's hedge fund increased its holdings in this AI colossus by 194% during the third quarter. Once again, this increase occurred as Citadel's put and call option positions in Nvidia were reduced, which demonstrates the ongoing hedges Griffin's fund has in place. The reason institutional investors and billionaire asset managers have piled into Nvidia is very simple: its unmistakable dominance in AI-accelerated data centers. Nvidia's graphics processing units (GPUs) accounted for an estimated 98% of shipments to data centers in 2022 and 2023, per TechInsights, and orders for its H100 GPU (commonly known as the "Hopper" chip) and Blackwell GPU are currently backlogged. Nvidia's hardware is the preferred option as the brains that power split-second decision-making for high-compute data centers. To add to the above, Nvidia's pricing power and gross margin are undeniably benefiting from enterprise demand swamping supply. When the demand for a good outpaces supply, the law of supply and demand states the price of that good will rise until demand tapers. Nvidia has been netting $30,000 to $40,000 for its Hopper chip, which is double to quadruple the price point of Advanced Micro Devices Insight MI300X AI-GPU. It should also be noted that no other company appears to be particularly close to challenging the computing capabilities of Nvidia's GPUs. While competing chips may offer subtle advantages with select tasks, or perhaps be more energy efficient, they continue to play second fiddle to the computing potential of Nvidia's hardware. But there's another side to the Nvidia story that Griffin and other optimistic billionaire money managers may be overlooking. For example, competitive pressures are beginning to crop up, as evidenced by the sudden gross margin decline Nvidia is contending with. AI-GPU scarcity has played a critical role in boosting Nvidia's pricing power and its gross margin. However, many of Nvidia's top customers by net sales are internally developing AI-GPUs of their own. Even though these chips aren't superior to Nvidia's hardware, they're cheaper and more easily accessible. When combined with AMD and other external rivals ramping production of their AI-GPUs, it's easy to see how Nvidia's pricing power and margins could wane in the coming quarters. Nvidia is also contending with history, which has been anything but an ally of game-changing innovations over the last three decades. For 30 years, investors have consistently overestimated the early stage utility and adoption of new technologies and innovations, which has eventually led to a bubble-bursting event. There's nothing that suggests AI or Nvidia is going to be the exception.

Does Billionaire Ken Griffin Know Something Wall Street Doesn't? The Citadel Chief Sold More than Half His Broadcom Stock and Is Piling Into Another Artificial Intelligence (AI) Stock-Split Stock Instead | The Motley Fool

Ken Griffin is arguably one of the most successful investors of all time. He made a name for himself when he shorted stocks just ahead of the 1987 market crash that came to be known as "Black Monday." His profits last year topped $7 billion as his returns of roughly 15% outpaced many of his peers. That result pales in comparison to his performance in 2022, though, when Citadel became "the most successful hedge fund ever," according to CNN, generating profits of $16 billion, the "largest annual windfall on record." Griffin has been outspoken about the potential for generative AI. "This branch of AI will be game-changing for the economy," he said, "because it will take an enormous amount of work that's done today by people and do it in a distinctly different, highly automated, highly efficient way." These weren't just empty words. At the end of last year, Griffin's top five individual stock holdings were all AI companies. It's therefore worth noting that Griffin has sold more than half his stake in AI stock Broadcom (AVGO 0.18%), and is pouring funds into another AI stock-split stock instead. Broadcom is one of the gatekeepers in the AI ecosystem. The company provides a wide range of products used in the cable, mobile, broadband, and data center industries. It reports that "99% of all internet traffic crosses through some type of Broadcom technology," making it a key provider of the tech necessary to facilitate AI. In its fiscal third quarter, which ended Aug. 4, Broadcom's revenue grew 47% year over year to $13.1 billion, while its adjusted earnings per share (EPS) increased 18% to $1.24. Management expects its growth streak to continue, and boosted its full-year revenue forecast to $51.5 billion, which would equate to growth of 44%. Those results help illustrate why Broadcom stock is up 64% over the past year and 188% over the past three years (at the time of this writing). The stock has risen so much, in fact, that management instituted a 10-for-1 stock split that was completed on July 15. Wall Street is nearly unanimous in its opinion of Broadcom. Of the 42 analysts who cover the stock, 37 rate it a buy or strong buy, and none recommend selling. That backdrop makes it all the more notable that, during the third quarter, Griffin sold more than 3.1 million shares of Broadcom -- roughly 64% of Citadel's stake in it. He still holds 1.72 million shares worth about $296 million. At the same time, he was buying another AI stock -- Nvidia (NVDA -3.22%). It's clear Griffin thought Nvidia represented a compelling opportunity last quarter. The billionaire investor increased Citadel's stake by more than 7 million shares, an increase of 454%. That brought his total stake to 712 million shares worth $865 million. Among the thousands of stocks in Citadel's portfolio, Nvidia is the second-largest individual stock holding. Nvidia has been the poster child for the AI revolution, as its graphics processing units (GPUs) are the most-used hardware for providing the computational horsepower needed to train and run AI models. This has caused a run on the company's state-of-the-art processors, which have become the gold standard for data centers, where most AI processing takes place. The unprecedented demand has had an unmistakable impact on Nvidia's financial results. During its fiscal 2025 third quarter, which ended Oct. 27, Nvidia's revenue soared 94% year over year to $35 billion, while its adjusted EPS surged 103% to $0.81. Management left no doubt about what drove the results. "The age of AI is in full steam, propelling a global shift to Nvidia computing," said CEO Jensen Huang. Those results help explain why Nvidia stock is up 196% over the past year and 342% over the past three years (as of this writing). The company's unbridled success led management to initiate a 10-for-1 stock split, which was completed on June 10. Broadcom isn't the only AI stock-split stock that Wall Street is nearly unanimous about. Of the 64 analysts who have offered an opinion on Nvidia, 60 rate the stock a buy or strong buy, and none recommend selling. We don't know exactly when during the third quarter that Griffin added to his stake in Nvidia, but a quick look at the stock chart might provide some insight. In mid-June, rumors about a potential delay in the release of the company's highly anticipated Blackwell processors sent the stock tumbling, and by early August, Nvidia had shed 27% of its value. Griffin likely saw a bargain he couldn't resist. It turns out that Griffin probably didn't know something that Wall Street doesn't. He simply saw a compelling opportunity, and he took it. Should retail investors follow his lead now? Nvidia stock currently trades for 69 times earnings, but that P/E metric doesn't take into account the company's above-average growth. Wall Street is predicting Nvidia will generate EPS of $4.36 in its fiscal 2026, which will begin in late January. That gives it a valuation of about 34 times forward earnings. While that's certainly still a premium price, Nvidia is guiding for year-over-year revenue growth of 70% in the current quarter, with a commensurate uptick in profits, and Wall Street is predicting sales growth of 49% next year. Given the company's critical place in the AI revolution and its robust prospects, I am completely convinced that Nvidia stock is still a buy.

Billionaire Ken Griffin Increased Citadel's Position in This Nvidia Partner by 291% | The Motley Fool

Billionaire hedge fund manager Ken Griffin just raised Citadel's position in global-consulting powerhouse Accenture. No other company has benefited more from the artificial intelligence (AI) revolution than Nvidia. The company's compute and networking products are connected to just about every single application in generative AI in some form or fashion. Given its influence on the generational opportunity AI presents, it's not shocking to learn that investors have been eagerly buying Nvidia stock in droves over the last couple of years. With that said, smart investors know that Nvidia isn't the only player in town. While analyzing the most recent 13F filing from Ken Griffin's hedge fund, Citadel Advisors, I came across a pretty interesting move he made last quarter. Namely, Citadel scooped up 787,000 shares of consulting firm Accenture (ACN 0.42%) -- increasing its position by 291%. Below, I'm going to detail why I think this is a savvy move by Griffin and outline how Accenture is benefiting from Nvidia's dominance in the AI realm. Back in October, Accenture announced the creation of the Nvidia Business Group -- a team of 30,000 professionals trained on Nvidia's AI stack. The goal is to help enterprises familiarize their teams with Nvidia's various AI platforms, including Foundry, Enterprise, and Omniverse. There are a couple of obvious benefits to training employees at large corporations on Nvidia's AI stack. First, both Nvidia and Accenture benefit from this partnership as each serves as a form of lead generation for the other. But perhaps more importantly, integrating AI-powered services throughout large enterprises can yield game-changing efficiencies when it comes to costs and productivity. Below, I'm going to explain just how lucrative Accenture's foray into the AI realm could be. Years ago, I worked at an enterprise software start-up that developed a querying tool called a knowledge graph. One challenge that customers consistently expressed was that implementing the software tool provided to them was time consuming. For this reason, my company developed a professional services team that worked alongside clients, helping them integrate and scale our software as needed. One interesting learning point from this effort is that customers often came back after a couple of months, eager to purchase more licenses to our software and increase their professional services hours as they discovered more use cases. This exact dynamic appears to be unfolding at Accenture. During the fiscal fourth-quarter earnings call, Accenture CEO Julie Sweet explained that the company is "starting to see more of our clients move from proofs of concept to sort of larger implementations which is important. So the size of those bookings is clicking up." What Sweet is explaining here is that over the last year, many of Accenture's customers were still in discovery or exploratory phases of their AI journeys. Now that these businesses have started to seriously invest in AI products and services, it's only natural for use cases and applications to evolve into more time-consuming, sophisticated projects. For those reasons, customers are likely going to remain sticky within Accenture's ecosystem, relying more on the company's professional services team to help further integrate various AI strategies. While I don't think Accenture will exhibit the same kind of growth as that of a high-growth software as a service (SaaS) stock, I still think the company is a compelling buy and is currently an under-the-radar opportunity in the AI realm. For Accenture's full year of fiscal 2024 (ended Aug. 31), the company generated $3 billion in bookings related to generative AI projects. To put this into perspective, Accenture reported $81.2 billion in total bookings for the fiscal year, underscoring that AI is still just a nominal component of the overall operation. But given the explanation from Sweet above, I'm thinking that AI is going to be a major tailwind for Accenture for years to come. An investment in Accenture could be seen in a similar vein to a long-term call option on the broader AI narrative without paying a premium for the most in-demand opportunities, such as Nvidia.

Does Billionaire Ken Griffin Know Something Wall Street Doesn't? The Citadel CEO Dumps $750 Million in Microsoft Stock | The Motley Fool

While much of the media's attention has been squarely focused on Nvidia, longtime tech behemoth Microsoft (MSFT 1.00%) is an artificial intelligence (AI) force to be reckoned with as well. The company is a close partner of OpenAI, having invested billions of dollars in the creator of ChatGPT. Aside from this direct investment, Microsoft's Azure Cloud is the favored provider for ChatGPT's computational needs. Generative AI models like ChatGPT require enormous amounts of computing power, the kind that few companies have the resources to provide. Microsoft is one of those companies. Investors have generally favored the company over the last few years -- although not to the degree some of its peers have enjoyed -- in large part because of its relationship with OpenAI and Azure's success. So why did the head of one of the most successful hedge funds on Wall Street, Ken Griffin, sell nearly 70% of his stake this year? First, let me note that although Griffin's fund, Citadel, sold shares in the first two quarters of 2024, it actually bought shares last quarter. However, its third-quarter purchase of roughly 20,000 shares is dwarfed by the combined 3 million shares Citadel let go in the first half of the year. It's not just Microsoft, however. In Q3, Griffin sold about 90% of his Amazon and Apple stakes, 80% of his Bank of America shares, and 95% of his Walt Disney stakes. On the other hand, Griffin bought nearly 5 million shares of Nvidia and 7 million shares of Citigroup. This is all to say that Ken Griffin runs an active fund, and it is not unusual for him to sell a large position only to reenter a few quarters later. It's not clear if he's lost faith in Microsoft in the longer term, or if he sees a more short-term opportunity. There are reasons to believe it could be the former, though. OpenAI is unique, and not just because it's a pioneer in modern AI. It was founded as a non-profit, transitioned into something of both a for- and non-profit, and is now evolving into entirely for-profit. Microsoft invested its billions in the second of those stages, reaching an agreement where a cap was placed on how much return Microsoft could earn. Now, OpenAI is inviting a new round of investment while removing the cap. Although Microsoft is a part of it, it is not "leading" the round -- lead investors usually receive the most favorable terms and enjoy the most influence. This has reportedly caused a rift in their relationship and could lead to legal woes in the future. This is not great for Microsoft. Its "golden goose" may not really belong to it, at least not in the way many investors had hoped. How much independence OpenAI walks away with remains to be seen, but Microsoft seems to be hedging its bet, having hired talent from OpenAI's competitors to flesh out its AI program in-house. It was reported last week that the U.S. Federal Trade Commission (FTC) is preparing to launch an investigation into "anti-competitive practices" at Microsoft, specifically its Azure Cloud. The FTC is looking into allegations that Microsoft is making it difficult for customers to switch from Azure by imposing harsh and unfair terms. This wouldn't be the first time the FTC investigated Microsoft, and the company is certainly not the only tech company currently drawing unwanted attention from the regulator. Still, keep your eyes peeled for more news here. While it would certainly be a blow to the company for it to lose its close relationship with OpenAI, I think Microsoft's continued success in AI is likely given the strength of Azure. Microsoft isn't showing the kind of growth I'd like to see given the premium its stock is carrying -- it's currently trading at 35 times earnings -- but it's not outrageous for the tech sector. Ultimately, I think there are probably better opportunities in the market, but Microsoft can still be a solid part of a well-diversified portfolio.