Hedge funds beefed up A.I. bets in the second quarter

Published Tue, Aug 15 20234:54 PM EDT

2023 has been the year for artificial intelligence stocks, and hedge funds in the second quarter beefed up their bets on the growth sector despite its sharp run up this year. Anything connected to AI has seen its share price — and valuation — rise this year as recent developments fan hopes that the fledgling technology will transform the globe and some of the largest companies. Even with these share moves, the latest regulatory filings paint a broadly positive view toward megacap names from some of the biggest investors during the second quarter, with many boosting old stakes or scooping up fresh positions in 2023's AI winners. Doubling down on Big Tech Despite the uptick in tech shares by the end of the first half, many hedge funds amped up their bets on Alphabet during the second quarter. After revealing a new position in the search giant during the first quarter, Bill Ackman's Pershing Square upped its stake in Alphabet to more than $1.3 billion. Dan Loeb's Third Point also added to Microsoft, while Tiger Cub hedge fund Coatue Management hiked its stake in the software giant by nearly 68% to about $1.8 billion. GOOGL YTD mountain Alphabet shares year to date Earlier in the year, both tech giants took center stage as they battled it out with competing chatbots. Alphabet and Microsoft have gained more about 47% and 35% this year, respectively, and continue amping up their AI offerings. David Tepper's Appaloosa bet big on AI winners , growing positions in Alphabet, Amazon , Meta Platforms and Microsoft during the period. Further, the fund opened a stake in Apple worth about $93 million. Amazon also garnered investor attention, with Baupost's Seth Klarman and Third Point opening fresh stakes in Amazon , totaling $125 million and $534.5 million, respectively. Philippe Laffont's Coatue more than doubled its stake. AMZN 3M mountain Amazon shares over the last three months Elsewhere, Tiger Global's Chase Coleman upped his position in the Facebook-parent by 15% to nearly $2.46 billion. Shares of Meta have benefited handsomely from Mark Zuckerberg's focus on efficiency and cost cutting , up more than 150% year to date. Betting on chip stocks Nvidia shares have popped 200% as the company triumphs as AI chipmaker to beat this year. In May, the company revealed blowout quarterly results and guidance that showed booming demand for its graphics processing units underpinning these technologies. Even so, many hedge funds wagered their bets on this integral semiconductor name, and peer beneficiaries such as Advanced Micro Devices , up close to 72% year to date. That included Dan Sundheim's D1 Capital . The fund took new positions in both Advanced Micro Devices and Nvidia. In the first quarter, the fund had dumped its position in Nvidia. NVDA YTD mountain Nvidia shares year to date Viking Global's Ole Andreas Halvorsen opened a stake in Nvidia , while Loeb's Third Point made a fresh $211.5-million bet . Loeb also bought a position worth $247.3 million in Taiwan Semiconductor , and upped his stake in Advanced Micro Devices. Both funds raised their Micron Technology bets. Along with boosting its Nvidia stake by 580%, Appaloosa made new bets on AMD, Intel and Qualcomm . The fund took a fresh gamble on Micron Technology , Broadcom and Marvell Technology . Philippe Laffont's Coatue trimmed its stake in Nvidia by nearly 7% during the period, but the GPU maker remained its largest holding. He also beefed up his bet on Applied Materials and increased his stakes in AMD and Taiwan Semiconductor by more than 64% and 14%, respectively. AMD YTD mountain Advanced Micro Devices shares in 2023 Coleman's Tiger Global also boosted his bets on chip stock during the period, increasing his stakes in Nvidia and Taiwan Semiconductor. Beyond these pure-play AI bets, Coleman added to semiconductor Lam Research . Signs of profit-taking? While the recent filings paint a broadly positive view toward 2023's AI winners, some funds took profits or reduced exposure to some key pure-play megacap positions during the second quarter Coleman pared back stakes in major tech winners, slashing his Amazon position by nearly 62% and his Alphabet stake by more than 54%. He also trimmed his position in Microsoft and dissolved positions in Apple and Applied Materials. Apple shares have hit multiple all-time highs this year as the company made its first major move into the AI field with its Vision Pro headset. While the stock's pulled back in recent weeks, the iPhone maker is up about 37% year to date. META YTD mountain Shares of Meta Platforms year to date Sundheim also reduced positions in key AI beneficiaries Alphabet, Microsoft and Meta, and dissolved his positions in Amazon and Salesforce. Baupost and Third Point reduced stakes in Alphabet, while Coatue trimmed its Meta and Netflix positions by about 30% and 27%, respectively. Keith Meister's Corvex Management trimmed stakes in Microsoft and Salesforce , while Viking Global slashed positions in Amazon and Meta by more than 42% and 19%, respectively. Some popular chip stocks also experienced some deteriorating investor sentiment. Along with a slight trim to Nvidia, Laffont pulled back stakes in Lam Research, NXP Semiconductors , and On Semiconductor . — CNBC's Yun Li, Sarah Min and Brian Evans contributed reporting