Noticed something interesting in the latest hedge fund filings. Peter Thiel, the Palantir co-founder and Silicon Valley venture capitalist, just made some significant portfolio moves through his hedge fund Thiel Macro. He's dumped his Nvidia position entirely and trimmed Tesla holdings, but here's where it gets intriguing—he's gone all-in on Apple and Microsoft, which now make up 61% of the fund's assets.

Let me break down what Thiel is doing here. Apple sits at 27% of the portfolio while Microsoft takes up 34%. For context, Thiel Macro manages $74 million, so while this might seem small relative to his $26 billion net worth, the conviction behind these positions is pretty clear. The guy's betting heavily on AI-enabled software and services.

Starting with Apple: the company just crushed earnings in their December quarter with 16% revenue growth hitting $143.7 billion. What caught my attention is the China recovery—sales jumped 38% after struggling the year before. But here's the real play: Apple just announced they're integrating Alphabet's Gemini models into Siri instead of building their own LLM in-house. That's a pragmatic move. Rather than trying to compete with OpenAI and others on model development, they're leveraging existing tech to accelerate AI rollout. They've already introduced Apple Intelligence features (currently free), and they're planning a premium tier in the coming years. The services revenue angle here could be significant.

That said, Apple's valuation is stretched. Trading at 33x earnings with only 10% projected annual earnings growth over the next three years makes you wonder if Thiel caught this at the wrong time. The stock's gotten expensive.

Now Microsoft—this is where Thiel's conviction seems strongest at 34% of the portfolio. The company's leveraging its enterprise software dominance to push AI copilots into every productivity tool imaginable. In the last quarter, copilot seats grew 160% and daily active users jumped tenfold. They're also expanding Azure's AI capabilities through their new Foundry platform, which lets developers build and manage custom AI applications. Customer spending hit $1 million+ quarterly increased 80% in December.

There's also the OpenAI angle. Microsoft owns 27% of OpenAI and has exclusive rights to their most advanced models. That's a huge moat. Developers basically need to use Azure if they want access to ChatGPT-level models for custom work. Microsoft reportedly gets 20% of OpenAI's revenue from this arrangement.

Microsoft stock did take a 10% hit after disappointing December earnings—capex spending on AI infrastructure came in hotter than expected and Azure growth slowed. But the fundamentals are solid. Adjusted earnings grew 24%, and at 27x earnings the valuation looks reasonable compared to the growth trajectory.

What Thiel's portfolio shift tells me is that the smart money is rotating out of pure hardware plays (Nvidia, Tesla) and into software-as-a-service AI winners. Whether that thesis plays out depends on execution, but the logic is sound.