Billionaires Are Selling Nvidia and Buying This TSX Stock Instead

Nvidia stock looks like it may have peaked for now, which is why billionaires are taking their winnings and putting them on another horse.

| More on:
A microchip in a circuit board powers artificial intelligence.

Source: Getty Images

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has positions in the iShares MSCI USA Quality Factor Index ETF. The Motley Fool recommends Nvidia and PayPal. The Motley Fool has a disclosure policy.

More on Tech Stocks

how to save money
Tech Stocks

Should You Buy Shopify Stock Hand Over Fist Before November 12?

Here are the top reasons why you may want to consider buying Shopify stock before its upcoming earnings event.

Read more »

stocks climbing green bull market
Tech Stocks

Why Propel Stock Keeps Going Up

Propel stock has seen a fivefold increase in its market cap in the last year! But even more is set…

Read more »

a-developer-typing-lines-of-ai-code-while-viewing-multiple-computer-monitors
Tech Stocks

Could Constellation Software Become the Next Berkshire Hathaway?

Constellation Software's (TSX:CSU) capital-allocation strategy is similar to that of Berkshire Hathaway (NYSE:BRK.B).

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy With $1,000 Right Now

These three Canadian tech stocks could be among the best growth opportunities in the market right now.

Read more »

happy woman throws cash
Tech Stocks

3 Growth Stocks That Could Be Long-Term Wealth Creators

These three growth stocks aim to grow their financials at a higher rate than the industry average, thus delivering superior…

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is POET Technologies a Top AI Stock for Canadian Investors?

Canada has relatively few AI stocks, and the ones it has are different from American AI stocks in terms of…

Read more »

Rocket lift off through the clouds
Tech Stocks

2 Growth Stocks That Could Skyrocket in 2025 and Beyond

Wondering what types of stocks could rapidly rise in 2025? Check out these two stocks with substantial upside if they…

Read more »

up arrow on wooden blocks
Tech Stocks

The 3 Smartest Tech Stocks to Buy With $500 Right Now

Tech stocks can be seen as a bit risky, but these three have far less risk and more stability for…

Read more »