Ken Griffin’s Bold Moves: Divesting Nvidia While Investing in Amazon
Ken Griffin, founder and CEO of Citadel, stands as a prominent figure in the investment world. Citadel is recognized as the most profitable hedge fund in history based on net gains since inception, according to LCH Investments. Griffin’s investment choices provide valuable insights for investors, particularly through the quarterly Forms 13F he files with the SEC, outlining his fund’s stock transactions.
This year, Griffin made notable adjustments to his portfolio involving two key players in the artificial intelligence sector: Nvidia (NASDAQ: NVDA) and Amazon (NASDAQ: AMZN).
- In the first quarter, Griffin reduced his holdings in Nvidia by selling 2.4 million shares, a decrease of 68%. During the same period, he purchased 352,453 shares of Amazon, raising his stake by 6%.
- In the second quarter, he sold 9.2 million shares of Nvidia, cutting his investment by 79%. Conversely, he increased his position in Amazon by buying 1.1 million shares, up 17%.
As of June 30, Amazon emerged as Citadel’s largest holding, excluding options and index funds. This indicates Griffin’s substantial confidence in the tech giant. Here’s what investors should keep in mind.
Diving Deeper into Nvidia: A Stock on the Decline
Nvidia’s graphics processing units (GPUs) are essential for data center acceleration, especially in the realm of artificial intelligence. Forrester Research recently stated, “Without Nvidia’s GPUs, modern AI wouldn’t be possible.” The company’s success stems from its combination of superior hardware and a strong ecosystem of software development resources.
Nvidia introduced CUDA, a programming model, back in 2006. This innovation allowed developers to create GPU-accelerated applications, leading to a substantial library of over 400 code libraries and 600 pretrained models that serve various fields such as data science and machine learning.
Recently, the company has integrated CUDA into subscription software and cloud services, exemplified by its AI Enterprise platform, which supports developers in crafting AI applications. Additionally, DGX Cloud is a comprehensive solution that equips businesses with the infrastructure necessary for AI development.
In the second quarter of fiscal 2025, Nvidia experienced significant growth. Sales surged by 122% to $30 billion, while non-GAAP net income rose by 152% to $0.68 per diluted share. The demand for Nvidia’s next-generation Blackwell GPU remains high, with production commencing this quarter and chips selling out for a whole year.
Wall Street anticipates Nvidia’s earnings to grow at 51% annually through fiscal 2026. Although the current valuation of 66.5 times adjusted earnings appears fair, it’s not considered inexpensive. Despite Griffin’s divestiture, long-term investors might find value in acquiring shares before the next earnings report on Nov. 20.
Exploring Amazon: A Stock on the Rise
Amazon drives growth through three primary sectors: e-commerce, digital advertising, and cloud services. Its robust position in these markets is bolstered by the use of artificial intelligence to enhance revenue and operational efficiency. For example, the company applies expansive data sets to optimize inventory and delivery logistics on its platform.
This data also supports Amazon’s shopping assistant, Rufus, and aids in delivering personalized ads. As a result, Amazon now ranks as the third-largest player in ad technology worldwide, growing faster than industry giants Alphabet and Meta Platforms.
Looking beyond retail, Amazon Web Services (AWS) dominates the public cloud market, commanding 31% of cloud infrastructure spending last quarter—almost equivalent to Microsoft and Alphabet’s total. AWS is poised for further growth, especially as cloud computing gains traction amid rising AI adoption. Gartner has acknowledged AWS as a leader in AI developer services and machine learning.
Amazon delivered strong financial results in the third quarter, surpassing expectations on both revenue and profits. Revenue climbed 11% year-on-year to $159 billion, chiefly due to notable increases in advertising and cloud service sales. Its operating margin improved significantly, and GAAP net income rose 52% to $1.43 per diluted share.
In the upcoming years, Wall Street forecasts Amazon’s earnings to grow at 24% annually through 2025. The current valuation of 44.5 times earnings feels reasonable, though not cheap. Long-term investors could consider initiating a small position today, being aware that a potential pullback of around 20% from current levels might occur—again, this could present a favorable buying opportunity.
Should You Invest $1,000 in Nvidia Right Now?
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
