Amazon vs Nvidia: Billionaires Are Buying One and Selling the Other

Billionaires haven't missed out on the artificial intelligence (AI) story. Managers of some of the world's biggest funds have piled into this popular growth area, investing in stocks that have fueled gains in all three major indexes.

Last year, the S&P 500 and Nasdaq rose 23% and 28%, respectively, and the Dow Jones Industrial Average added 12% thanks to excitement about this technology.

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And one of the most sought-after stocks has been Nvidia (NASDAQ: NVDA), a player that's been roaring higher since the early days of the AI boom. The stock climbed 171% last year alone.

It's the leading designer of AI chips, and this has helped the company's revenue soar to records quarter after quarter. This AI star was one of the four most popular tech stocks in a Motley Fool analysis last year of 16 hedge funds run by billionaires.

But Nvidia isn't the only company benefiting right now from the AI boom. Amazon (NASDAQ: AMZN), through its cloud unit Amazon Web Services (AWS), sells a wide variety of AI products and services to customers, and this helped AWS report an annualized revenue run rate of $110 billion. Shares rose 44% last year.

Though both of these stocks are important fixtures in many successful investors' portfolios, in recent times, billionaires have been buying one and selling the other.

Image source: Getty Images.

A glimpse into the minds of billionaires

Managers overseeing $100 million or more must file a report each quarter detailing their investment moves, and these 13F forms offer us a glimpse into the minds of some of the world's best investors. Copying every one of their moves isn't realistic, and certain buys or sells may not even align with your strategy or investment style.

But a look through the 13F window into what billionaires are doing could offer us valuable insights -- and some investing ideas -- since they have proved their knowledge of the market over time. And in recent times, billionaires have been buying Amazon and selling Nvidia.

In the third quarter, Bruce Kovner's Caxton Associates, Stephen Mandel Jr.'s Lone Pine Capital, and Philippe Laffont's Coatue Management each added to their shares of Amazon. Caxton made a particularly big move, increasing its Amazon holding by more than 400%, and it now represents 10% of the portfolio, up from just under 2%.

At the same time, Stanley Druckenmiller of the Duquesne Family Office sold all of his Nvidia shares, and Appaloosa Management's David Tepper and Coatue's Laffont reduced their positions in the top chip designer.

Of course, these moves don't necessarily mean Nvidia's growth is over. Druckenmiller even said in an interview with Bloomberg that he regretted his sale of the stock and would consider buying it again if the price were right.

In many cases, investors are locking in profits on Nvidia and looking for other players that may have a lot to gain in the next wave of AI growth. And that company may be Amazon.

AI scores wins in e-commerce and cloud computing

Amazon is winning in AI in two ways. The company's e-commerce operation has become more efficient thanks to its investment in the technology.

For example, AI-powered robotics have streamlined operations in fulfillment centers. And this helps lower costs, allowing it to keep offering low prices to customers and still generate a solid profit. This is immediately positive for earnings and should boost profits down the road as customers, liking those low prices, keep coming back.

But where Amazon may score the biggest win is in cloud computing. As mentioned, AWS sells a massive portfolio of AI products and services, and this already has supercharged revenue growth.

Now, as we enter the agentic AI era, Amazon could play a major role. Agentic AI is software that can reason and apply a solution to a problem, allowing the progress we've seen so far in the technology to be applied to the real world.

It's seen as driving a whole new wave of AI growth. And AWS, with its platform for building agentic AI, could become one of the big winners.

So billionaires who have been buying shares of Amazon may be setting themselves up for additional AI gains this year and in the years to come. And the good news is that you don't have to be a billionaire, drop Nvidia, or overhaul your strategy to potentially score a win, too. Instead, just add a few shares of Amazon to your portfolio and hold on as this AI growth story moves into the next exciting stages.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.