Key Points
The Magnificent Seven technology stocks have driven the S&P 500 to a spectacular 76% gain over the past three years. Investors, from the smallest retail investor to billionaire hedge fund managers, have rushed to get in on these companies as many play a key role in a very hot technology: artificial intelligence (AI). Since AI has what it takes to supercharge corporate operations and therefore earnings growth, the savviest of investors have looked for potential winners in this new gold rush.
And one of these investors has been billionaire Michael Platt, co-founder and chief executive officer of BlueCrest Capital Management, a European hedge fund overseeing more than $1.6 billion in 13F securities. Managers of more than $100 million in U.S. securities must report trades quarterly on Form 13F to the Securities and Exchange Commission, offering us a glimpse of their latest moves.
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Platt heavily invests in financial stocks, but he’s also been a supporter of tech stocks in recent times and even held several Magnificent Seven players. However, in the first quarter of this year, the billionaire closed positions in four of these AI titans, and at the same time added to his holding of a company that may be a surefire winner in the AI infrastructure spending boom. Is Platt souring on the Magnificent Seven? Let’s take a closer look.
Image source: Getty Images.
Trillion-dollar companies
First, let’s identify the Magnificent Seven. They are: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. These companies are each involved to some degree in the AI boom and have delivered gains in recent years. They are the world’s biggest companies, each topping $1 trillion in market value — and Nvidia is the biggest, with a market capitalization of more than $5 trillion.
Now, let’s consider certain moves Platt made in the first quarter of the year.
- Platt sold all of his Nvidia stock. It represented almost 0.2% of his portfolio, and he originally bought the shares in the second quarter of last year.
- He sold all of his Microsoft shares. They represented 0.1% of the portfolio, and he initially bought them in the third quarter of 2023.
- He sold all of his Meta shares. They represented 0.06% of the portfolio, and he first bought them in the third quarter of last year.
- Platt sold all of his Amazon stock. It represented 0.7% of his portfolio, and he initiated that position in the third quarter of last year.
- Meanwhile, Platt increased his position in Taiwan Semiconductor Manufacturing (NYSE: TSM) by more than 430% to 35,824 shares. The stock, which he originally bought in the fourth quarter of last year, now accounts for 0.7% of his portfolio.
The biggest winner of the infrastructure boom
So, is Platt souring on the Magnificent Seven? The 13F filings don’t offer us reasons behind investors’ latest moves, and that means we can’t answer the question with 100% certainty. But Platt’s moves suggest he believes TSMC could be the biggest winner in the current phase of AI growth, and this is the infrastructure spending stage. Tech giants aim to spend nearly $700 billion this year alone to support the build-out, and companies offering chips, memory, and other products and services essential to data centers could benefit.
Enter TSMC. The charm of this company is that it gains from demand for just about any chip since it’s the manufacturer of chips from all of the major designers, including Nvidia, Broadcom, and Advanced Micro Devices, just to name a few. So, as an investor, by betting on TSMC, Platt doesn’t have to guess which chip designer will dominate the market — TSMC’s revenue will climb as long as demand for any of these chips marches on. And in the AI build-out, cloud companies must invest in high-powered compute. All of this means TSMC could be a surefire winner of the AI boom in the quarters to come.
What about the Magnificent Seven? There’s reason to be optimistic about many of these players, too, over the long term — but investors aiming to choose a clear winner of the current stage of AI growth might consider following Platt into TSMC.
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Adria Cimino has positions in Amazon and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Broadcom, Meta Platforms, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
