Susquehanna Group Shifts Strategy: Selling Nvidia and Buying Micron
Jeff Yass is the co-founder of institutional money manager Susquehanna International Group (SIG). SIG specializes in quantitative trading and holds positions across many leading technology stocks.
In SIG’s latest 13F filing, a noteworthy decision was revealed. During the second quarter, SIG sold 52 million shares of Nvidia (NASDAQ: NVDA), reducing its stake in the chipmaker by approximately 73%.
Simultaneously, SIG increased its investment in Micron Technology (NASDAQ: MU) by 271%, acquiring 3.5 million additional shares. Below, I will explain why this swap from Nvidia to Micron could be a strategic move and why Micron might offer better long-term growth potential.
Why is Now the Time to Sell Nvidia?
Nvidia has long been the flagship of the chip industry, enjoying significant growth thanks to its graphics processing units (GPUs). These GPUs play a vital role in advancing generative AI technologies, and Nvidia is often regarded as the leader in this market.
However, the landscape is evolving. Major Nvidia customers like Microsoft, Alphabet, Tesla, Meta Platforms, and Amazon are investing heavily in building their own chip solutions. This shift could flood the market with more GPU options, making it difficult to predict Nvidia’s future growth.
While it’s hard to gauge the exact impact of this competition on Nvidia, it’s reasonable to expect a slowdown in revenue and profit growth. This concern is reflected by other prominent investors, such as Ken Griffin of Citadel and David Shaw of D. E. Shaw, who have recently scaled back their Nvidia holdings.
Even though Nvidia is likely to maintain a strong position in the AI sector for the foreseeable future, its stock has surged 227% over the past year, raising concerns about its long-term valuation.
Why Invest in Micron Now?
Micron’s financial profile can appear inconsistent at a glance, with revenue trends showing notable fluctuations, and its profitability still not fully established.
Despite these challenges, Micron presents a compelling long-term investment as demand for memory and storage solutions rises. This demand is critical for training large language models and enhancing generative AI applications. As major cloud service providers like Amazon, Microsoft, Oracle, and Alphabet ramp up their investments in data center and chip infrastructure, Micron stands to benefit significantly.
Since many of these projects will take years to develop, Micron appears well-positioned for sustained growth moving forward.
Looking Toward the Future
Ultimately, it makes sense to maintain some investment in Nvidia, especially with the upcoming launch of its Blackwell series GPUs, which could provide a short-term boost.
However, the future outlook for Nvidia is uncertain as competition intensifies. In contrast, Micron has yet to fully realize its potential from the AI boom. Over time, Micron could turn into a significant investment opportunity as its revenue stabilizes and profits grow more steadily.
Susquehanna’s choice to reduce its Nvidia position while increasing its stake in Micron reflects a strategic move that could yield substantial returns in the future.
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