Billionaire Stanley Druckenmiller Dumped all of His Nvidia Shares Last Year and Just Bought Shares of This Top AI Player

Once every quarter, we -- and I mean investors of every portfolio size, from a few dollars on up to millions or billions -- get a great opportunity. We're able to see the latest moves of some of the most successful investors, those who have built and maintained billion-dollar portfolios. Managers of $100 million or more in the U.S. must report their latest trades on form 13F to the Securities and Exchange Commission -- and these forms are available for all of us to examine.

Of course, copying every move of every billionaire investor is impossible. But by studying some of their moves, we may gain valuable investing ideas -- and ones that could boost us along the path to wealth. One particular billionaire to watch is Stanley Druckenmiller, the investor who led Duquesne Capital Management to an average annual return of 30% without any money-losing year over a period of 30 years.

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Druckenmiller has since closed the fund but invests through the Duquesne Family Office -- and here he recently made a big move. Druckenmiller last year dumped all of his Nvidia (NASDAQ: NVDA) shares, and in the fourth quarter, opened a position in another top artificial intelligence (AI) stock. Let's find out more.

Image source: Getty Images.

Druckenmiller sells Nvidia

First, a look at Druckenmiller's Nvidia move. The leading AI chip designer represented the billionaire's top holding back in 2023, but last year he began reducing his position and completely closed it out in the third quarter. As Druckenmiller has said, this wasn't due to a loss of faith in the company, but more as a move to lock in profits.

Nvidia stock had soared 1,700% over the past five years thanks to demand for its AI chips and other related products and services. Quarter after quarter, this market leader reported double- or triple-digit revenue growth, with revenue reaching record levels well into the billions of dollars. For example, Nvidia generated more than $35 billion in revenue in the most recent quarter, and that's at a high level of profitability on sales -- with gross margin surpassing 70%.

But Nvidia's valuation climbed, reaching beyond 50x forward earnings estimates last year. Druckenmiller actually said in an interview with Bloomberg that his decision to close the Nvidia position was a mistake and he would consider picking up the shares again in the future at the right valuation.

Now, let's consider Druckenmiller's move in the fourth quarter of last year. He didn't pick up shares of Nvidia again -- but he opened a position in a company that's also bringing in billions of dollars thanks to AI. And this company is Amazon (NASDAQ: AMZN), a leader in both e-commerce and cloud computing.

Druckenmiller bought 328,400 shares, representing a value of $72,048,000 and more than 1.9% of his portfolio. This positions Amazon as one of Druckenmiller's top five buys during the quarter.

How Amazon excels in AI

So, how does this company fit into the AI space? Amazon benefits from AI in two ways. It uses the technology to gain in efficiency across its e-commerce business -- for example, AI tools help streamline operations across its fulfillment centers. And Amazon Web Services (AWS) -- the cloud business -- sells AI products and services to customers.

Here, through AWS, Amazon already is scoring a major AI win. The business is present across every layer of a customer's potential AI needs -- AWS offers the basics for the training of models, such as chips, and it also offers a fully managed service that allows companies to tailor models to their needs. On top of this, AWS develops AI-driven apps to immediately apply AI to complete tasks and solve problems.

All of this has helped the cloud business reach a $115 billion annualized revenue run rate. So Amazon already is winning in the AI business. And this is likely to continue as we're still in the early stages of AI development -- today's $200 billion market is forecast to reach beyond $1 trillion by the end of the decade.

So, Druckenmiller may regret his sale of Nvidia, but his move to get in on Amazon at this point could lead to more major AI-gains for his portfolio -- and for the portfolio of any investor who buys this AI stock now and holds on for the long term.

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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.