“We’ve had a hell of a run.”
Dial It Back
The AI bubble isn’t bursting just yet, but one insightful investor is suspicious it’s overhyped.
During an appearance on CNBC‘s Squawk Box, billionaire Stanely Druckenmiller — the founder of the Duquesne Family Office hedge fund — revealed that his firm had cut its investment in the AI chipmaker Nvidia earlier this year.
As the financier explained, he’d decided to invest in Nvidia after one of his firm’s young partners told him about Nvidia in 2022 and predicted that AI was going to be even bigger than the blockchain.
“I didn’t even know how to spell it, [but] I bought it,” Druckenmiller said. “Then a month later, ChatGPT happened. Even an old guy like me could figure out okay, what that meant, so I increased the position substantially.”
The rest is history. Last May, Business Insider reported that the Duquesne Family Office had spent a combined $430 million on Nvidia and Microsoft in its big AI bet — but by November, the firm had already begun trimming the fat.
While he didn’t go into specifics about this latest Nvidia load-lightening, the investor seemed to suggest that he saw the writing on the wall when the AI chip company’s stock jumped up to $900 earlier in the year.
“We did cut that and a lot of other positions in late March,” Druckenmiller said. “We’ve had a hell of a run. A lot of what we recognized has become recognized by the marketplace now.”
Break It Down
Overall, the billionaire investor said that he simply needed a “break” from AI as it started to look a bit “overhyped” — even while saying that he remains “bullish” on the industry and that it might be “underhyped” in the long-term.
“As we go through all this capital spending, we need to do the payoff while it’s incrementally coming in by the day,” Druckenmiller said. “The big payoff might be four to five years from now.”
He went on to suggest that while other investors may have held onto their Nvidia shares to watch what happens — but Druckenmiller is not, as he said, the type to “own things for 10 or 20 years.”
“I’m not Warren Buffet,” he joked. “I wish I was Warren Buffet.”
And speaking of the Oracle of Omaha: the Berkshire Hathaway founder suggested over the weekend that AI is an incredible growth market, but a scary one at that.
Buffett described during a shareholder call seeing a deepfake video of himself that was so convincing, it could have gotten him to “send money to myself over and over in some crazy country.”
At the end of the day, though? The money men can make all the pronouncements they want, but what actually happens is anyone’s guess.
More on the business of AI: In Latest Sign of Dot Com Style Bubble, Startup “Hires” Goofy AI Version of Alan Turing
