Nvidia ‘s explosive rally Thursday only reinforced the growing interest in next-generation artificial intelligence, and the favorite bets of some of Wall Street’s biggest players seek to capitalize on the same trend. Hedge funds piled into Nvidia in the first quarter, just in time for the chipmaker’s eye-popping rally following a blowout forecast. Now Nvidia is on the cusp of a $1 trillion market capitalization after making a shockingly strong forecast of future demand. But it’s not just Nvidia that the smart money is betting on to power AI growth. High-profile investors have loaded up on other manufacturers of advanced chips as well as AI-related software stocks. Alphabet Billionaire investor Stanley Druckenmiller ‘s Duquesne Family Office built a sizable stake in Alphabet in the first quarter, making it one of his top 10 holdings. Alphabet’s Google unit recently announced it will bring AI features to its signature search engine to turn complex queries into simple answers by combining results from multiple sources. Dan Loeb’s Third Point also purchased Alphabet in the first quarter, making it the fund’s fifth-biggest holding. Meanwhile, Alphabet attracted interest from Bill Ackman’s Pershing Square Capital Management, which opened a new position totaling nearly $1.1 billion in the first quarter. Shares of Alphabet have rallied almost 40% this year as investors grew optimistic about the company’s AI capabilities. GOOGL YTD mountain Alphabet Chipmakers Druckenmiller, who recently said AI could be “every bit as impactful as the internet,” also bought chipmaker Taiwan Semiconductor , Nvidia’s rival, last quarter. Taiwan Semi also drew interest from Tiger Global Management and Coatue Management, who took new stakes in the same period. The stock jumped more than 10% on Thursday. Last quarter, Philippe Laffont’s Coatue also drastically increased its exposure to Advanced Micro Devices , another chip producer tied to AI. Stephen Mandel’s Lone Pine Capital had its eye on memory chipmaker ASML Holding , which has rallied nearly 30% this year. AI software Druckenmiller revealed recently that his Microsoft stake was also a bet on AI. Microsoft has announced a multiyear, multibillion-dollar investment in ChatGPT maker OpenAI, marking the third phase of their partnership. Meta Platforms was also a popular investment for hedge fund investors, including David Tepper, Daniel Sundheim and Laffont. Meta recently announced AI computer chips, which will eventually power more advanced metaverse-related tasks, such as virtual reality and augmented reality, as well as generative AI. Also last quarter, Laffont’s Coatue unveiled a position in C3.ai , a software company that helps customers crunch and analyze huge amounts of data. Another AI software maker, Palantir, lately attracted buying from Ark Invest’s Cathie Wood. — CNBC’s Samantha Subin contributed reporting.
