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Ken Griffin made Wall Street history. This billionaire investor became famous for accurately predicting the 1987 stock market crash. He cemented his legacy as CEO and founder of Citadel Advisors. Under his watch, the firm became the most successful hedge fund in history, defying the recession and generating $16 billion in profits in 2022, the largest windfall in hedge fund history.
Griffin is also outspoken about the impact of generative artificial intelligence (AI). “This field of AI will revolutionize the economy because it will require a huge amount of work currently done by humans, and it will require a completely different, highly automated and highly efficient method. According to Bloomberg Intelligence, the market is expected to be worth $1.3 trillion by 2032, although some estimates suggest many taller than.
Against this backdrop, investors will not be shocked to learn that despite a highly diversified portfolio containing thousands of stocks, Citadel’s top five individual positions are in AI stocks. right.
Image source: Getty Images.
1. Nvidia
not surprising Nvidia (NVDA -5.55%) It’s at the top of Griffin’s list of AI holdings. The company’s graphics processing units (GPUs) were already the gold standard in many existing AI use cases. Nvidia dominates the GPU market for data center and machine learning applications and was quick to jump on the generative AI opportunity.
But demand far outstrips supply, and despite triple-digit year-over-year growth in each of the past three quarters, the AI chip shortage is expected to last until 2025, with the magnitude of demand It is in relief. While rival companies are working hard to develop worthy competitors, NVIDIA’s history of spending heavily on R&D and consistent innovation keeps it two steps ahead of its competitors. .
Despite its dominance, NVIDIA remains significantly undervalued, with a price-to-earnings ratio (PEG) of less than 1, the benchmark for undervalued stocks.
Griffin increased his holdings by about 77% in the fourth quarter and now owns about 3.6 million Nvidia shares worth $3.1 billion (as of Tuesday’s market close).
2.Microsoft
microsoft (MSFT -0.71%) Through strategic investments in OpenAI, the creator of ChatGPT, and the integration of generative AI into its wide range of products and services, the company has quickly established itself as a leader in the AI space.
The standard-bearer for these efforts is Copilot, the company’s AI-powered digital helper suite, which some analysts say could generate up to $100 billion in incremental revenue by 2027, but forecasts suggest continues to rise. Additionally, the company’s AI efforts continue to increase demand for its Azure cloud and outpace competitors, with Microsoft attributing 6 percentage points of last quarter’s growth to AI demand. I am.
The company’s stock is selling for 34 times forward earnings, a slight premium compared to the broader market, but given Microsoft’s growth potential, this is a steal compared to the opportunity.
Griffin reduced his holdings by about 16% in the fourth quarter and now owns about 4.2 million shares of Microsoft stock, worth $1.7 billion.
3. Advanced microdevices
Nvidia is the undisputed leader in the AI chip market; Advanced Micro Devices (AMD -1.89%)also known as AMD. pepsi To Nvidia coke. The company enjoys a cult following for its gaming processors, but in recent years has pivoted to data centers and AI.
The Ryzen 7000 and 8000 series processors are the result of these efforts and are the first CPUs to feature a dedicated onboard AI engine. His MI300 will be added to the AI chip lineup. It combines CPU and GPU capabilities to “accelerate AI workloads.”
As increasing demand for AI faces supply constraints, AMD is well-positioned to offer a viable, low-cost alternative. Additionally, the PEG ratio is less than 1, which meets the criteria for an undervalued stock.
Griffin increased his stake in AMD by about 140% in the fourth quarter and now owns about 6 million AMD shares worth $1.2 billion.
4. Meta
meta platform (meta -1.22%) has a long history of integrating AI across social media platforms. These advanced algorithms not only show you relevant content, but also target your digital ads more effectively.
Despite not having a cloud platform to sell its AI products, Meta came up with a brilliant workaround. The company has several versions of its Llama AI model, which can be found on all major cloud infrastructure platforms, creating an entirely new revenue stream for Meta. The company has also developed a comprehensive suite of AI-based tools for advertisers on its platform.
A continued recovery in the advertising market will also undoubtedly boost the company’s fortunes. On the other hand, with a forward P/E ratio of just 25 times, Meta stock is undervalued.
Griffin increased his holdings by about 127% in the fourth quarter and now owns about 2.5 million Metaplatform shares worth $1.2 billion.
5. Amazon
Amazon (AMZN -0.83%) The company also has a strong track record of implementing AI across its operations, so it’s no surprise that the company has made a serious move into generative AI. The company already uses AI to show shoppers relevant products, predict inventory levels, and schedule e-commerce deliveries. Just recently, Amazon began testing an AI tool designed to answer shoppers’ questions about products.
Amazon Web Services (AWS) offers a set of in-demand generative AI models for cloud users through the Bedrock AI platform. The company has also developed an in-house AI processor to offer cloud customers a variety of cost options to meet any budget.
The economic recovery is driving demand across Amazon’s various businesses, and AI will add another arrow to its quiver. With a forward sale of less than 3x, investors get all that potential at a discount.
Griffin increased his holdings by about 227% in the fourth quarter and now owns about 6.2 million Amazon shares worth $1.1 billion.
Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Danny Vena has held positions at Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Meta Platforms, Microsoft, and his Nvidia. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
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