Billionaires are starting to sell their Nvidia (NASDAQ:NVDA) stock, even amidst the company’s impressive growth and massive role in the artificial intelligence (AI) revolution. Nvidia has seen a staggering 182% stock price increase over the past year and boasts excellent financial metrics, including 122% year-over-year revenue growth and a 168% jump in quarterly earnings. However, Nvidia’s high valuation, with a forward price/earnings (P/E) ratio of around 35, has raised concerns about how much higher the stock can go.
The sale
Several well-known investors have reduced their Nvidia holdings due to its sky-high prices and the desire to lock in gains. For instance, billionaire Paul Tudor Jones sold 78% of his position in Nvidia. Even though Nvidia continues to perform well, these investors are looking for alternative opportunities where growth potential still exists without the hefty valuation.
So, where are these billionaires investing now? Many are pivoting to stocks like PayPal, Broadcom, and ZoomInfo Technologies. PayPal offers potential through its new ad network, and Broadcom is making strategic moves into AI infrastructure, while ZoomInfo offers an attractive discount following a dip in its stock price. Steven Cohen, for example, sold off part of his Nvidia stake to build a massive position in Broadcom, betting on its future role in AI development.
Why these stocks
Broadcom, in particular, is attracting attention due to its focus on low-power accelerators and AI infrastructure. Its diversified offerings in data centres, AI chips, and networking solutions make it a compelling investment – especially for those who still want exposure to AI but at a more reasonable price compared to Nvidia.
Meanwhile, PayPal is gaining traction for its potential advertising revenue stream, leveraging the data it collects from transactions. Jim Simons’ Renaissance Technologies and Paul Tudor Jones are among those who have moved capital into PayPal, hoping to catch a future wave of growth in digital payments and fintech advertising.
A Canadian option
For investors who want to diversify across all these tech opportunities, exchange-traded funds (ETF) like the iShares MSCI USA Quality Factor Index ETF (TSX:XQLT) offer a smart approach. XQLT tracks high-quality stocks and gives exposure to companies like Nvidia, Broadcom, PayPal, and others. Instead of picking individual stocks, this ETF allows you to hold a basket of top performers and benefit from the collective growth in tech and AI.
Altogether, while Nvidia remains a tech powerhouse, its high valuation has prompted some billionaires to shift focus. They are seeking growth in other tech companies like Broadcom and PayPal, which offer innovative opportunities at a more attractive price. For everyday investors, ETFs like XQLT provide a well-rounded way to gain exposure to all these trends without the need to pick individual winners.
