Billionaire Stanley Druckenmiller Piled Into 2 of the Hottest AI Stocks for a Second Consecutive Quarter (No, Not Nvidia or Palantir)

Data is the fuel that keeps Wall Street’s engine turning. Unfortunately for investors, the amount of data they need to digest can be overwhelming. Between earnings reports and economic data releases, it’s easy for something to slip through the cracks.

For example, Feb. 17 marked the deadline for institutional investors with at least $100 million in assets under management to file Form 13F with the Securities and Exchange Commission. A 13F allows investors to track which stocks Wall Street’s savviest money managers are buying and selling, including billionaire Stanley Druckenmiller of Duquesne Family Office.

Image source: Getty Images.

Druckenmiller has an exceptional track record of crushing the broader market, with a touted annualized return of approximately 30% from 1981 to 2010. Unsurprisingly, Duquesne’s 13F is among the most anticipated on Wall Street.

While there were certainly surprises in the latest 13F detailing Druckenmiller’s fourth-quarter trading activity, such as the 29% reduction in chip fabricator Taiwan Semiconductor Manufacturing, it’s Duquesne’s billionaire boss’s fascination with two of the hottest artificial intelligence (AI) stocks – Alphabet (GOOGL +3.42%)(GOOG +2.80%) and Amazon (AMZN +1.10%) – that made waves.

AI application stocks have billionaire Stanley Druckenmiller intrigued

AI represents the biggest technological leap forward since the advent and proliferation of the internet in the mid-1990s. By 2030, PwC’s analysts believe it’ll create more than $15 trillion in global economic value.

While graphics processing unit giant Nvidia and data-mining specialist Palantir Technologies have been among the biggest beneficiaries of the AI revolution, Druckenmiller sold his stakes in both companies some time ago. Nowadays, he favors Alphabet and Amazon.

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NASDAQ: GOOGL

Alphabet

Today’s Change

(3.42%) $9.83

Current Price

$297.39

Key Data Points

Market Cap

$3.6T

Day’s Range

$290.41 - $300.52

52wk Range

$140.53 - $349.00

Volume

172K

Avg Vol

35M

Gross Margin

59.68%

Dividend Yield

0.28%

During the fourth quarter, Duquesne’s billionaire investor added 282,800 shares of Alphabet’s Class A shares (GOOGL) and 300,870 shares of Amazon. This increased his stakes in both companies by 277% and 69%, respectively. It also marked the second consecutive quarter that Druckenmiller purchased shares in both companies.

Although Alphabet and Amazon have foundational operating segments – Alphabet’s Google accounts for approximately 90% of internet search market share, and Amazon’s online marketplace dominates in the U.S. – it’s the incorporation of generative AI solutions and large language model capabilities into their cloud infrastructure service platforms that are fueling their growth.

For the fourth quarter, Alphabet reported 48% revenue growth for Google Cloud, the world’s No. 3 cloud infrastructure services platform. Meanwhile, Amazon Web Services saw its sales growth reaccelerate to 24% when compared to the previous year. Although AI infrastructure investments have been eye-popping, Alphabet and Amazon are delivering tangible results that show this spending is worthwhile.

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NASDAQ: AMZN

Amazon

Today’s Change

(1.10%) $2.30

Current Price

$210.57

Key Data Points

Market Cap

$2.3T

Day’s Range

$208.21 - $213.58

52wk Range

$161.38 - $258.60

Volume

2.4M

Avg Vol

51M

Gross Margin

50.29%

Both companies are also historically inexpensive relative to their forecasted cash flow in 2027. Alphabet is trading at 14.3 times next year’s projected cash flow, while Amazon is even cheaper at 9.7 times estimated cash flow. To put these figures into context, Alphabet and Amazon are trading at 20% and 48% discounts to their respective average multiples to cash flow over the last five years.

Billionaire Stanley Druckenmiller has a knack for spotting value hiding in plain sight. Alphabet and Amazon certainly appear to fit that definition.