Billionaire Stanley Druckenmiller Sold Broadcom and Bought These Artificial Intelligence (AI) Giants Instead

Stanley Druckenmiller was early to spot the potential for some of the biggest AI chipmakers in the market. He bought Nvidia (NASDAQ: NVDA) for his Duquesne Family Office portfolio in late 2022. He ultimately made hundreds of millions of dollars from that purchase, but he admitted he sold the stock too soon, fully disposing of the position in 2024.

Druckenmiller sold another big AI chip stock last quarter, Broadcom (NASDAQ: AVGO), fully exiting his position. At the same time, he purchased relatively large stakes in two other AI giants further down the AI compute supply chain: Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

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Here's why Druckenmiller may have sold Broadcom and bought the hyperscalers instead and whether you should follow his lead.

Selling the chipmaker and buying the hyperscalers

Druckenmiller looks for investment opportunities created by major shifts in the global economy and markets. Nvidia and AI chipmakers are one of the clearest recent examples.

That is to say, valuation is a lesser concern for Druckenmiller. So, the fact that Broadcom floated up to a P/E of 40 at one point last quarter likely didn't have a huge impact on his decision to sell the stock. That said, the shares looked like a good value when he bought them in the prior quarter, below a forward P/E of 30.

Druckenmiller may have seen the trend toward hyperscalers taking more control of their own destinies last quarter, prompting him to add to Amazon and reestablish a position in Alphabet. The companies were raising capital through both debt and newly issued stock, spending heavily on new data centers to meet the growing demand for AI compute.

At first blush, that might seem to benefit a company like Broadcom, which makes networking chips as well as custom AI accelerator chips, including Alphabet's Tensor Processing Units (TPUs). But it seems that Amazon, Alphabet, and other major customers are exerting more control over which chips make it into their data centers.

Amazon CEO Andy Jassy said the largest number of the new chips going into its data centers this year will be its own custom Trainium chips, not Nvidia GPUs or any other off-the-shelf solution. AlChip is the company behind the design for the newest generation of Trainium chips and also won the next-generation Trainium 4.