Dan Loeb's Third Point Ramps Up AI Bets With Amazon, Nvidia and TSMC Stake

The hedge fund also slashed its Alphabet holding while buying Microsoft and Alibaba

By
Kevin George
Kevin George
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Kevin George is a freelance crypto writer and editor for Investopedia. He holds a master's degree in finance and has extensive knowledge and experience in the area of trading, markets, and economics.
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Published August 15, 2023
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Dan Loeb's Third Point has ramped up its investments in artificial investment (AI) stocks, with big stakes in Amazon (AMZN), Nvidia (NVDA) and Taiwan Semiconductor (TSM), after lamenting missing out on the tech rally by opting for value plays.

Key Takeaways

  • Dan Loeb's hedge fund has pivoted further to AI in its recent 13F filing.
  • The investor sees AI as a "once per decade" opportunity.
  • Big stakes in AI leaders such as Alibaba, Microsoft, and Nvidia dominate holdings.

Value Plays Replaced With AI 'Gold Rush' Stocks

Third Point added a huge 4.1 million share position in retailer Amazon (AMZN) worth roughly $534 million making it the third largest position in its portfolio, according to its 13-F filing for the quarter ended June 2023.

Loeb sees AI as a "once per decade" technology shift and he added positions in chipmakers Nvidia and Taiwan Semiconductor while upping his stakes in Micron (MU) and Advanced Micro Devices (AMD), for the upside of Large Language Models (LLMs) adoption. Loeb's firm also boosted its positions in Microsoft (MSFT) and Alibaba (BABA).

A surprising change was the downscaling of the company's bet on Alphabet Inc. (GOOG) (GOOGL) from 4.75 million shares to 1.42 million. Alongside Microsoft and Amazon, the three companies would be the “picks and shovels of the AI gold rush,” because of the requirement of cloud-scale resources for LLM, Loeb said in the company's second-quarter letter.

Cutting Back On Defensives and Short Bets

The company was able to increase its bullish bets by selling its entire $830 million stake in Colgate Palmolive (CL), with the continued drop in inflation likely to hurt consumer staples. Loeb expressed his disappointment that despite calling the bottom in the market, his company invested in "value situations," rather than tech stocks earlier this year. The company also sold off its entire position in United Health Group (UNH) worth about $158 million at the end of the first quarter.

Loeb said in his most recent letter that his fund is cutting back on the short-selling of stocks as, "fundamental analysis is increasingly taking a back seat to monitoring daily option expiries and Reddit message boards," referencing the short squeezes seen during 2021's meme stock craze.

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  1. SEC. "13F Filing Third Point 14 Aug, 2023."

  2. Third Point. "Second Quarter 2023 Investor Letter."

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