Ken Griffin Shifts Focus Within AI Investments

Griffin’s Successful Track Record

Ken Griffin is recognized as one of the most successful investors ever. He gained fame for shorting stocks before the 1987 market crash known as “Black Monday.” His profits last year reached over $7 billion, with returns of about 15%, surpassing many of his competitors. However, this was modest compared to 2022, when Citadel became “the most successful hedge fund ever,” raking in $16 billion, the largest annual profit on record, as reported by CNN.

Griffin’s Enthusiasm for AI

Griffin has voiced strong support for generative AI, calling it a potential game-changer. “This branch of AI will be game-changing for the economy,” he stated, emphasizing its ability to perform tasks currently handled by humans in a more efficient manner. At the close of last year, his five largest stock holdings were all in AI companies.

A Shift in Strategy for Broadcom

Interestingly, Griffin sold over half of his stake in AI stock Broadcom (NASDAQ: AVGO) and is now channeling funds into another AI stock.s

Image source: Getty Images.

Broadcom’s Explosive Growth

Broadcom has established itself as a crucial player in the AI ecosystem. The company supplies diverse products to sectors such as cable, mobile, broadband, and data centers. It claims that “99% of all internet traffic crosses through some type of Broadcom technology,” making it essential for AI operations.

In the fiscal third quarter ending August 4, Broadcom’s revenue surged 47% year on year to $13.1 billion, while adjusted earnings per share (EPS) rose 18% to $1.24. The company’s management has raised its full-year revenue forecast to $51.5 billion, indicating a projected growth of 44%.

This strong performance explains why Broadcom stock has risen 64% in the past year and 188% over the last three years. The stock’s substantial increase prompted a 10-for-1 stock split on July 15.

Wall Street analysts’ opinions align almost entirely in favor of Broadcom. Out of 42 analysts covering the stock, 37 rate it a buy or strong buy, with no sell recommendations.

During the third quarter, Griffin sold more than 3.1 million shares of Broadcom—about 64% of Citadel’s stake. However, he retains 1.72 million shares valued at approximately $296 million, while simultaneously increasing his investment in another AI stock—Nvidia (NASDAQ: NVDA).

Nvidia: The Rising AI Star

Griffin identified Nvidia as a significant opportunity. He raised Citadel’s stake by over 7 million shares, a 454% increase, bringing the total to 712 million shares worth $865 million. Nvidia now ranks as Citadel’s second-largest individual stock holding.

Nvidia is widely recognized as a leader in the AI revolution, with its graphics processing units (GPUs) being critical for the computational power required to train and run AI models. The surging demand for these processors has positioned Nvidia as the gold standard for data centers handling extensive AI processing.

This exceptional demand has positively influenced Nvidia’s financial results. In its fiscal 2025 third quarter ending October 27, Nvidia’s revenue soared 94% year over year to $35 billion, with adjusted EPS increasing 103% to $0.81. CEO Jensen Huang highlighted the AI boom, stating, “The age of AI is in full steam, propelling a global shift to Nvidia computing.”

Nvidia’s stock has jumped 196% over the past year and 342% in the last three years. This remarkable success led to a 10-for-1 stock split, completed on June 10. Wall Street shares a similar optimistic view on Nvidia, with 60 out of 64 analysts rating the stock as a buy or strong buy and none recommending a sell.

Taking Advantage of Market Fluctuations

It’s unclear when Griffin increased his stake in Nvidia, but a look at the stock chart shows significant fluctuations. After rumors in mid-June about possible delays for the new Blackwell processors, Nvidia’s stock fell by 27% by early August. Griffin may have perceived a buying opportunity.

Griffin’s decision to invest in Nvidia demonstrates his keen sense of opportunity in a volatile market. The question now is whether retail investors should follow his lead.

As it stands, Nvidia shares currently trade at 69 times earnings. However, that price-to-earnings ratio doesn’t account for the company’s potential for growth. Analysts project Nvidia will achieve an EPS of $4.36 in fiscal 2026, which suggests a valuation of about 34 times forward earnings. While this indicates a premium price, the company expects revenue growth of 70% in the upcoming quarter and continued expansion of 49% next year.

Considering Nvidia’s essential role in the AI revolution and its promising outlook, there is strong reason to view Nvidia stock as a buy.

A Lucrative Opportunity Awaits

Do you often feel you missed out on investing in successful stocks? If so, you may want to pay attention.

Sometimes, expert analysts issue a “Double Down” stock recommendation for companies they believe are poised for significant growth. If you’re concerned about missing the opportunity to invest, now might be the ideal time to act before it’s too late. Consider these past successful investments:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $368,053!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,533!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $484,170!*

Currently, we’re announcing “Double Down” alerts for three remarkable companies, and another chance like this may not come around soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 18, 2024

Danny Vena has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.