Billionaires Are Selling These Dow Jones Stocks and Buying These Instead

The Dow Jones Industrial Average includes 30 of the strongest companies around. This includes industry leaders that have a long record of delivering solid returns for investors, and many of these stocks pay regular dividends to shareholders.

Two notable billionaires, David Tepper of Appaloosa Management and Bill Gates, co-chair of the Gates Foundation, hold large stakes in Microsoft (NASDAQ: MSFT) and Amazon (NASDAQ: AMZN). But the latest Form 13F filings with the Securities and Exchange Commission (SEC) reveals that these firms reduced their stakes in the two stocks in the fourth quarter and were buying two other Dow Jones stocks.

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David Tepper sells Amazon, buys more Nvidia

David Tepper's Appaloosa Management still held a stake of 2.6 million shares in Amazon last quarter, one of the firm's largest holdings, but after a 166% rise in the share price over the last 12 months, Tepper reduced his firm's stake by over 18%.

Amazon is performing well, with operating profits exploding due to rising margins in retail and growth in its highly profitable cloud services business, but Tepper may see more return potential with Nvidia (NASDAQ: NVDA). The artificial intelligence (AI) chip leader is growing revenue much faster than Amazon and may outperform it over the next few years.

Tepper's decision to buy more Nvidia shares in the fourth quarter would have come before the news in January that China's DeepSeek built a more advanced AI model at a relatively low cost. This shook Wall Street's confidence about the near-term demand for Nvidia's graphics processing units (GPUs), sending its stock down from recent highs.

Nvidia entered 2025 with tremendous momentum after reporting that its data center revenue grew 112% year over year in its fiscal third quarter. Despite DeepSeek's achievement, analysts are sticking to their growth estimates. The current Wall Street consensus has Nvidia's revenue growing 51% this year to reach $196 billion, according to Yahoo! Finance.

The semiconductor industry can be cyclical. A slower rate of spending in the data center market could stall Nvidia's momentum and send the stock down, but it doesn't appear that data center spending is going to slow anytime soon. Meta Platforms and Amazon announced major spending plans this year on technology to support AI efforts, which bodes well for the data center market and Nvidia's business.

Tepper is likely making a bet on the long-term growth of AI and the substantial investment that data center operators will continue to make to develop more advanced AI technologies. Indeed, DeepSeek is a signal that the cost of AI research is dropping, and that could incentivize more companies to double down on AI, leading to accelerated innovation that ultimately benefits Nvidia.

Nvidia has had an incredible run, but the stock still trades at a reasonable forward price-to-earnings multiple of 32. That multiple drops to 25 when looking out to fiscal 2027 earnings estimates. If Nvidia continues to experience strong demand for its GPUs, the stock could hit new highs over the next few years.

Bill Gates sells Microsoft, buys McDonald's

Gates is famous for starting Microsoft, which has benefited from growth in the cloud computing market in recent years and appears well-positioned to capitalize on growing demand for AI services in the cloud. Not surprisingly, Microsoft is the Gates Foundation's largest holding, but it has been reducing its stake in the software leader and diversifying into other blue chip stocks over the past few years.

Microsoft stock is trading at a rich price-to-earnings multiple of 33, but may not be reporting enough earnings growth to justify it. In the most recent quarter, the company's earnings grew 10% year over year, while management also noted execution issues within its Azure cloud business. After climbing 70% over the last two years, the stock has stalled year to date.

The Gates Foundation made one new buy last quarter in McDonald's (NYSE: MCD). The Golden Arches is an all-weather investment that can perform well through economic cycles.

The company's U.S. market experienced weak sales performance following an E. coli outbreak, but the stock has held up well and is sitting close to new highs. Analysts expect the company to return to growth this year, with revenue and earnings anticipated to increase by 2.5% and 8%, respectively.

The food safety issues are largely behind the company now, and management is focused on growth. McDonald's expects to open about 2,200 restaurants globally in 2025. This suggests there are still a lot of opportunities for the brand to expand in new geographies.

McDonald's has used its massive resources to boost marketing efforts around its value offering. Its focus is on expanding the McValue menu to drive market share gains in the near term that could position McDonald's for more growth when the global economy is stronger.

The fees the company collects from its large base of franchise owners make for a highly profitable business. McDonald's generates a high profit margin of 31% on revenue, and that allows it to continuing paying dividends to shareholders no matter how the economy performs. The stock's price-to-earnings and price-to-cash-flow multiples are within its historical valuation ranges. This indicates the stock is fairly priced and should continue to perform well for investors.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.