Worth Investing in Ken Griffin's Top 3 AI Stocks?
Published Date::17/10/2024
Billionaire Ken Griffin, known for his diversified investment strategy, has significantly increased his stakes in Amazon, Apple, and Broadcom. Find out if these AI-focused stocks are worth your investment.
Ken Griffin, the billionaire hedge fund manager of Citadel, has a well-diversified investment portfolio that includes over 5,800 holdings. This strategy has proven successful, as Griffin's net worth is estimated to be around $43 billion. With such a diversified portfolio, it's no surprise that Griffin owns a significant number of artificial intelligence (AI) stocks. Here are his top three AI stocks and an analysis of whether they are worth investing in now.
1. Amazon
Amazon (AMZN) is the largest individual stock holding for Griffin, and it ranks third in his overall portfolio after two exchange-traded funds. As of June 30, 2024, his hedge fund owned 7.69 million shares of the e-commerce and cloud services giant, worth around $1.49 billion. Griffin increased his stake in Amazon by nearly 17% in the second quarter of 2024, showing his continued bullish stance on the company.
AI is deeply integrated into Amazon's operations. The company uses AI to recommend products, power its popular AI assistant Alexa, optimize warehouse operations, and offer a wide array of AI tools through Amazon Web Services (AWS). While Amazon, like its peers, was initially caught off-guard by the rapid rise of OpenAI's ChatGPT, AWS still faces stiff competition from Microsoft Azure and Alphabet's Google Cloud.
Despite these challenges, Amazon remains a leader in AI with the resources to stay at the forefront. AWS continues to be the top cloud services provider, making Amazon stock one of the best AI picks around.
2. Apple
Apple (AAPL) is Griffin's second-largest individual stock holding, with Citadel owning 5.47 million shares worth $1.15 billion as of the end of the second quarter of 2024. Griffin increased his position in Apple by 93% in Q2, a move likely driven by the company's emerging AI capabilities.
Apple recently introduced its generative AI capabilities, known as Apple Intelligence. Analysts, such as Dan Ives from Wedbush, believe that Apple Intelligence could spark a supercycle of iPhone upgrades, providing a significant boost to Apple. However, some skeptics argue that Apple's slow rollout of AI features could be a drawback. The stock is currently trading at a forward price-to-earnings ratio of around 30, which may already factor in positive growth expectations.
While I agree with the skeptics that we may not see an immediate surge in iPhone upgrades, I believe that iPhone sales will increase over time, potentially accelerating in 2026 and 2027. Therefore, Apple is a solid long-term investment for AI enthusiasts.
3. Broadcom
Broadcom (AVGO) is Griffin's third-largest AI stock and ranks among Citadel's top 10 holdings. At the end of Q2, the hedge fund owned 4.84 million shares of the semiconductor and infrastructure software company, worth $776.7 million. Griffin increased his position in Broadcom by about 64% in Q2.
AI is a significant growth driver for Broadcom, with CEO Hock Tan estimating that the company will generate $12 billion from AI in fiscal year 2024, representing 23% of its total revenue. Broadcom has also launched new AI infrastructure products, such as ethernet networking switches designed to accelerate AI workloads.
FAQS:
Q: What is Citadel?
A: Citadel is a global investment firm founded by Ken Griffin in 1990. It is known for its sophisticated quantitative trading strategies and a diverse portfolio of over 5,800 holdings.
Q: Why is AI important for Amazon?
A: AI is crucial for Amazon as it powers product recommendations, the popular AI assistant Alexa, optimizes warehouse operations, and offers a wide array of AI tools through Amazon Web Services (AWS).
Q: What is Apple Intelligence?
A: Apple Intelligence is Apple's generative AI capability, which the company recently introduced. Analysts believe it could spark a supercycle of iPhone upgrades, providing a significant boost to Apple.
Q: How much does Griffin own in Broadcom?
A: As of the end of Q2 2024, Griffin's hedge fund, Citadel, owned 4.84 million shares of Broadcom, worth $776.7 million. He increased his position in Broadcom by about 64% in Q2.
Q: What is Broadcom's AI strategy?
A: Broadcom's AI strategy includes generating significant revenue from AI, with CEO Hock Tan estimating $12 billion from AI in fiscal year 2024. The company has launched new AI infrastructure products, such as ethernet networking switches designed to accelerate AI workloads.