Billionaire Stanley Druckenmiller Dumped Broadcom and 11X'd His Fund's Stake in This Trillion-Dollar Dual-Industry Leader
Although earnings season tends to garner all the glory, the quarterly filing of Form 13Fs with regulators can be just as valuable. A 13F provides investors with a concise snapshot of which stocks and exchange-traded funds Wall Street's savviest money managers have been buying and selling.
Following the retirement of Warren Buffett on Dec. 31, there's arguably no billionaire money manager more closely monitored than Duquesne Family Office's Stanley Druckenmiller , who runs an active fund that's consistently outpaced the average annual returns of the benchmark S&P 500 . During the second quarter, Druckenmiller bid adieu to artificial intelligence (AI) behemoth Broadcom (NASDAQ:AVGO) and increased his fund's stake in dual-industry leader Amazon (NASDAQ:AMZN) by 1,083%!
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According to Duquesne's 13F, its billionaire boss sent all 195,955 shares of AI networking solutions specialist Broadcom packing in the June-ended quarter.
Profit-taking is one of the more likely reasons Druckenmiller and his team exited this position after just one quarter. Whereas Broadcom spent the entirety of the first quarter vacillating between $300 and $350 per share, it spiked to an all-time high of $495 per share in early June. Depending on when Druckenmiller pulled the trigger, his fund could have netted in excess of a 50% return in mere months.
Duquesne Family Office has an average hold time of just seven months, indicating that its chief investor isn't afraid to ring the register when given the opportunity.
Back in May 2024, Druckenmiller told CNBC in an interview that, "AI might be a little overhyped now, but underhyped long term." While Broadcom's surging orders from hyperscalers back up its long-term growth potential, history shows that every game-changing technology, spanning more than three decades, has navigated an early-stage bubble-bursting event.
All innovations need time to mature, suggesting the prospect of an AI bubble forming and bursting is very much in play.
On the other hand, Druckenmiller gobbled up 495,800 shares of Amazon in the second quarter, which more than 11X'd his fund's stake in this dual-industry leader.
Most consumers are familiar with Amazon's dominant presence in online retail sales. Last year, Amazon accounted for more than 40% of U.S. e-commerce sales, more than quadrupling its next-closest competitor, Walmart (NASDAQ:WMT).
However, online sales yield only mediocre margins. Where Amazon generates the lion's share of its operating cash flow is from its cloud infrastructure services platform, Amazon Web Services (AWS).
Before AI was Wall Street's hottest trend, AWS was delivering high-teens sales growth. Since incorporating generative AI and large language model solutions into AWS, sales growth has reaccelerated to 37%, as of the second quarter. This significantly higher-margin segment currently sports $169 billion in annual run rate sales.
Whereas most trillion-dollar AI stocks have ascended to the heavens, Amazon is one of the few that offers an intriguing value proposition. Throughout the 2010s, Amazon consistently ended each year at 23 to 37 times its trailing 12-month cash flow. But thanks to AWS's rapidly growing sales, Amazon trades at a historically cheap multiple of 11 times projected cash flow per share in 2027.
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Sean Williams has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Broadcom, and Walmart. The Motley Fool has a disclosure policy .
