In today’s technological era, it would be hard for most individuals to claim they have not heard of artificial intelligence (AI). Millions of Americans are using AI more and more, with the evolving technology entering almost every workplace via routine and repetitive tasks that are helping to eliminate the burden on employees, as well as handling more complex tasks like data collection and analysis. While in recent years, AI stocks have been a driving force in the market, attracting immense hype from its potential, not everybody is buying into the commotion. Recently, Stanley Druckenmiller, an American billionaire investor and former hedge fund manager who slashed his stocks in Nvidia in late March, expressed his opinion that AI is “overhyped” and could be a boom overdone in the short run.
Beginning his career in 1981 as the president and founder of hedge fund Duquesne Capital Management, while also managing George Soros’ Quantum Fund from 1988 to 2000, Druckenmiller is not an unfamiliar name among investors.
The quick rise of AI since ChatGPT entered the game in November of 2022 has left Druckenmiller believing that this could mean that current AI stocks are overvalued. The investor, who is currently worth over $6 billion, decided to take his gains, reducing the bet after “the stock went from $150 to $900.”
Making it a point to decipher his own investment strategy from Warren Buffet’s, who just recently made known his decision to sell billions of dollars worth of Apple stock, Druckenmiller commented, “I’m not Warren Buffett—I don’t own things for 10 or 20 years. I wish I was Warren Buffett.”
Regarding his decision to slash his Nvidia stocks, Druckenmiller shared with CNBC’s “Squawk Box” that “We did cut that and a lot of other positions in late March. I just need a break. We’ve had a hell of a run. A lot of what we recognized has become recognized by the marketplace now.”
The former hedge fund manager was first introduced to the multinational corporation in the fall of 2022 by one of his younger partners. Druckenmiller commented “I didn’t even know how to spell it… I bought it. Then a month later ChatGPT happened. Even an old guy like me could figure out okay, what that meant, so I increased the position substantially.”
With one of the best-performing stocks at the end of last year, Nvidia has been the primary beneficiary of the technology industry’s obsession with large AI models, which the company develops on their expensive graphics processors that have become wildly popular. Over the last year, Nvidia has seen its stock skyrocket, up more than 216 percent.
The founder, currently running the Duquesne Family Office, Druckenmiller did express that, while he believes AI is currently receiving too much hype, the evolving technology is also “underhyped long term. AI could rhyme with the Internet. As we go through all this capital spending, we need to do the payoff while it’s incrementally coming in by the day. The big payoff might be four to five years from now.”
For now, Druckenmiller still toys with AI, while the market reassesses their lofty expectations and pricing of these high-flying stocks.
