The man who broke the bank of England is more focused on artificial intelligence (AI) these days. George Soros has been doubling down on positions in this booming new market, according to recent filings. In June 2022, the billionaire hedge fund manager published an editorial in which he stated, “I am instinctively opposed to AI, but I don’t know how it can be stopped.” Three months later, he’s gotten on board with AI as the market’s new frontier. One of the most influential figures in modern investing, Soros is known for taking risks that pay off. But now he’s turned his focus to AI stocks, zeroing in on some of the top companies in the space.
Which companies is the founder of Soros Management Fund doubling down on? Let’s take a look at his AI picks and the logic behind them,
George Soros’ Picks for AI Stocks
According to a quarterly filing, there are three AI companies that Soros is betting big on. Of the three, his biggest position is in Advanced Micro Devices (NYSE:AMD), consisting of 250,000 shares. This is substantially larger than his other two positions, which consist of 10,000 shares of both Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT).
All three AI stocks are starting this week off in the green. While that may be due to positive market momentum, it certainly doesn’t hurt that Soros has made substantial bets on them.
While Soros is loading up on some AI innovators, he’s ditching other investments in similar companies. He recently sold off his entire stake in Salesforce (NYSE:CRM), 170,000 shares in total. On top of that, he offloaded 38,500 shares of Snowflake (NYSE:SNOW).
While CRM stock is up for the past six months, SNOW has been struggling lately, despite its AI exposure. This makes it a seemingly odd time to take profits. The most likely scenario is that Soros is trying to make room for companies that he sees as having the most potential.
By that logic, he likely sees AMD as the best play among AI stocks. There’s plenty of reason to bet on it. The chipmaker is up more than 70% year-to-date (YTD), but it has slipped recently. This suggests there is a possible opportunity to buy it on the dip.
Many experts believe that it will rebound. AMD stock enjoys a strong buy consensus on TipRanks, with 25 out of 32 Wall Street analysts rating it as a “buy.” While the average price target is $141.90, InvestorPlace contributor David Moadel believes it can rise even higher. As he states:
“I’ve previously targeted $150 for AMD stock, and I’m sticking to that call. Folks who bet against AMD generally don’t win in the long run. So, feel free to hold your shares and don’t worry too much about the critics and complainers.”
What It Means
An endorsement from George Soros is no small thing. The hedge fund titan is in the same league as Ray Dalio and Ken Griffin; when he makes a bet, the investing world takes note. Soros has made it clear that he sees AMD, Nvidia and Microsoft as three of the best ways to play the AI boom.
Wall Street is even more bullish on Nvidia, with 30 out of 32 analysts maintaining “buy” ratings. The companies’ high exposure to just about every facet of the AI market, from machine learning to robotics make it a tempting play for anyone with deep pockets. And Microsoft’s large investment in ChatGPT maker OpenAI has compelled many investors to bet on it.
All three AI stocks were already in excellent positions to keep riding the AI wave to new heights. But now that George Soros is betting on them, they are even more likely to attract new investors in the coming months.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
