Major funds are buying shares of AI stocks left and right. Which ones do you like the most?
Artificial intelligence (AI) has the power to revolutionize our lives—at least if big tech is to be believed. Many products have already hit the market, such as ChatGPT, and while they have made waves, the true impact of the technology has yet to be felt. This promise of more to come is driving tremendous growth for companies involved in AI.
Major fund managers are snapping up shares of these businesses as they try to capture as much value as possible from the technology’s explosive growth. Funds with more than $100 million in assets under management must report their trading quarterly to the Securities and Exchange Commission on Form 13F. Luckily for us, it’s public knowledge.
Knowing where the “smart money” flows can help you make sound decisions, but it should only be part of your information gathering. It turns out that smart money isn’t always so smart — and besides, there are plenty of managers selling shares of the five stocks below.
1. Nvidia
Perhaps to no one’s surprise, the company with the largest hedge fund purchases was Nvidia (NVDA -6.68%). It captured the imagination of the investing world as it positioned itself as the go-to chipmaker for all things AI.
Its revenue growth has been incredible and it has done it all while keeping costs relatively low. The chart below measuring its net income growth over the past three years shows where AI rose.
NVDA Net Income (Quarterly) data according to YCharts.
Fund managers bought $15.9 billion worth of stocks last quarter. The largest purchases were $6.2 billion from Vanguard and $1.8 billion Black rock.
2. Amazon
One of my favorite AI games, Amazon (AMZN -1.86%), runs the world’s largest cloud computing operation, Amazon Web Service (AWS), controlling over 30% of the cloud market and is investing heavily to maintain this share. It partners with Nvidia to equip its data centers with the latest and most powerful chips, and invested $4 billion in OpenAI competitor Anthropic.
Fund managers bought $14.4 billion worth of stocks last quarter. The largest acquisitions were $2.5 billion (Vanguard) and $1.9 billion (BlackRock).
3. Microsoft
Another strong AI game, Microsoft (MSFT -0.47%), supports OpenAI, creator of the most popular AI app, ChatGPT. When OpenAI released ChatGPT-3 to the public, it became the fastest-adopted technology in history. For most of the public, ChatGPT is so far out of their AI knowledge, unaware of Anthropic’s offering or Alphabet‘s.
Microsoft is number 2 in the cloud and has been slowly making inroads into AWS market share. Its partnership with OpenAI means Microsoft has the world’s most widely used AI application on its servers. And Microsoft is also equipping them with Nvidia chips.
Fund managers bought $13.1 billion worth of stocks last quarter. The largest acquisitions were $2.8 billion (BlackRock) and $1.3 billion from Geode Capital Management.
4. Apple
This is different from the previous three. Apple (AAPL 0.31%) Shares fell for much of last year as investors worried it was lagging behind in AI.
But the company finally got around to it this month, unveiling Apple Intelligence, its cleverly named AI offering. Its products will have all kinds of AI enhancements (maybe now Siri will know what I ask it to do).
More importantly, the upgrades will require a lot of computing power for many older products in Apple’s lineup, forcing users to upgrade to the latest (and more expensive) models. That will help boost the company’s declining iPhone sales, a crucial part of its bottom line.
Fund managers bought $11.8 billion worth of stocks last quarter. The largest acquisitions were $1.3 billion (Geode Capital) and $983.9 million Lazard.
5. Broadcom
Like Nvidia, Broadcom (AVGO -3.70%) supplies hardware to the AI industry. They don’t compete head-to-head, leaving Nvidia to dominate the mainstream chip market. But one of the most important components in AI data centers is what allows all those chips to talk to each other quickly and seamlessly, which is where Broadcom comes in. Broadcom is a leading designer, manufacturer and supplier of semiconductors and equipment. infrastructure software products. Its product offerings serve the data center, networking, software, broadband, wireless, storage and industrial markets.
The company also made several key acquisitions that have fueled tremendous growth, as the revenue chart below shows. (It also shows an inflection point close to the one in Nvidia’s chart above.)
AVGO Revenue Data (Quarterly) according to YCharts.
Fund managers bought $11.8 billion worth of stocks last quarter. The largest acquisitions were $1.6 billion (Vanguard) and $1.5 billion from Jennison Associates.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft and Nvidia. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 Microsoft calls and short January 2026 $405 Microsoft calls. The Motley Fool has a disclosure policy.