Ken Griffin is the founder and CEO of Citadel, the most profitable hedge fund in history as measured by net gains since inception, according to LCH Investments. That makes him an excellent case study, and investors can track which stocks Citadel buys and sells using Forms 13F filed quarterly with the SEC.
Interestingly, while Nvidia(NASDAQ: NVDA) and Amazon(NASDAQ: AMZN) play important roles in the burgeoning artificial intelligence economy, Griffin bought one stock and sold the other throughout the first half of 2024, as detailed below.
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In the first quarter, Griffin sold 2.4 million shares of Nvidia, reducing his stake by 68%. He also bought 352,453 shares of Amazon, increasing his position by 6%.
In the second quarter, Griffin sold 9.2 million shares of Nvidia, reducing his stake by 79%. He also bought 1.1 million shares of Amazon, increasing his position by 17%.
Importantly, excluding options contracts and index funds, Amazon was the largest position in Citadel’s portfolio as June 30. So, Griffin clearly has a great deal of confidence in the company. Here’s what investors should know.
Nvidia graphics processing units (GPUs) are the gold standard in data center accelerators, particularly where artificial intelligence (AI) is concerned. Indeed, Forrester Research recently wrote, “Without Nvidia’s GPUs, modern AI wouldn’t be possible.” But the company has a durable competitive moat because it pairs superior GPUs with an unparalleled ecosystem of software development tools.
To elaborate, Nvidia in 2006 introduced CUDA, a programming model that enables developers to write GPU-accelerated applications. The ecosystem has since expanded to include over 400 code libraries and 600 pretrained models that simplify software development across domains ranging from data science and machine learning to scientific simulation and augmented reality.
More recently, Nvidia has integrated CUDA into subscription software and cloud services. Its AI Enterprise platform lets software developers build, deploy, and manage AI applications that span recommender systems to autonomous robots. Likewise, DGX Cloud is a full-stack service that brings together the supercomputing infrastructure and software businesses need for AI development workflows.
Nvidia looked strong in the second quarter of fiscal 2025, which ended in July 2024. Sales increased 122% to $30 billion and non-GAAP net income jumped 152% to $0.68 per dilute share. Investors have good reason to believe that momentum will continue. The production ramp of Nvidia’s next-generation Blackwell GPU started in the current quarter, and demand is so strong that the chips are already sold out for 12 months.
On that note, Wall Street expects Nvidia’s adjusted earnings to row at 51% annually through fiscal 2026, which ends in January 2026. That makes the current valuation of 66.5 times adjusted earnings look reasonable, but not cheap. Despite Ken Griffin selling Nvidia stock, long-term investors should consider buying a position today, with the understanding that shares could move sharply when the company reports earnings on Nov. 20.
Amazon has three important growth engines in e-commerce, digital advertising, and public cloud services. The company has a strong position in all three markets, and is using artificial intelligence to boost revenue and improve efficiency across its different businesses. For instance, as the most visited online marketplace, Amazon applies troves of data to machine learning models that optimize inventory levels and delivery routes.
Additionally, the same marketplace data powers Amazon’s new shopping assistant Rufus, and it informs machine learning models that help advertisers reach consumers with relevant content. In fact, Amazon’s ability to engage shoppers and source data has made it the third-largest ad tech company worldwide, and its ad revenue is growing faster than that of industry leaders Alphabet and Meta Platforms.
Beyond retail and advertising, Amazon Web Services (AWS) is the largest public cloud. It accounted for 31% of cloud infrastructure and platform services spending last quarter, nearly as much as Microsoft and Alphabet combined. Moreover, AWS is well positioned to gain market share as AI makes cloud computing more popular. Consultancy Gartner has recognized its leadership in AI developer services and machine learning platforms.
Amazon reported encouraging financial results in the third quarter, beating estimates on the top and bottom lines. Revenue increased 11% to $159 billion because of particularly strong sales growth in advertising and cloud services. Meanwhile, its operating margin expanded more than 3 percentage points and GAAP net income jumped 52% to $1.43 per diluted share.
Going forward, Wall Street expects Amazon’s earnings to increase at 24% annually through 2025. That makes the current valuation of 44.5 times earnings look tolerable, though I would not call it cheap. Long-term investors should feel comfortable buying a small position today, with the understanding that the stock could easily fall 20% from its current level. However, such a pullback would likely be a buying opportunity.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Trevor Jennewine has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Gartner and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
