Billionaires Are Selling Nvidia Stock and Buying 2 Artificial Intelligence (AI) Stocks That Come Highly Rated by Wall Street

Artificial intelligence (AI) has been a red-hot investment theme for nearly two years, and Nvidia has been one of the most popular ways to play that theme. But the billionaire hedge fund managers below sold shares of Nvidia during the second quarter, and shifted capital toward two other AI stocks, Amazon (NASDAQ: AMZN) and Taiwan Semiconductor (NYSE: TSM).

• Ken Griffin of Citadel Advisors sold 9.2 million shares of Nvidia, slashing his stake by 79%. He also added 1.1 million Amazon shares and 633,897 Taiwan Semiconductor shares. Amazon now ranks as his largest holding excluding options and index funds.

• Philippe Laffont of Coatue Management sold 96,963 shares of Nvidia, reducing his stake by 1%. He also purchased 702,235 Amazon shares and 1.1 million Taiwan Semiconductor shares, which now rank as his second and third largest positions, respectively.

Of course, the second quarter ended on June 30, so the trades detailed above occured months ago. However, Amazon and Taiwan Semiconductor still come highly recommended by Wall Street:

• Among the 65 analysts that follow Amazon, 95% rate the stock a buy and the remaining 5% rate the stock a hold. The median price target of $220 per share implies 18% upside from its current share price of $187.

• Among the 44 analysts that follow Taiwan Semiconductor, 98% rate the stock a buy and the remaining 2% rate the stock a hold. The median price target of $209 per ADR implies 15% upside from its current price of $181.

Here's what investors should know about Amazon and Taiwan Semiconductor.

1. Amazon

Amazon operates the world's most popular online marketplace in terms of monthly visitors, and the company has fortified its leadership with a robust logistics network. Dominance in retail has helped Amazon become the third-largest ad tech company in the United States, and it could surpass second-place Meta Platforms by the end of the decade, according to eMarketer.

Beyond retail and advertising, Amazon Web Services (AWS) is the market leader in cloud infrastructure and platform services, which puts the company in a unique position where artificial intelligence (AI) is concerned. With the largest community of customers and partners among public clouds, AWS has more monetization and upsell opportunities than its rivals. And consultancy Gartner recently recognized AWS as a leader in cloud AI developer services.

Amazon reported mixed financial results in the second quarter. Revenue increased 10% to $148 billion, narrowly missing estimates. But GAAP net income increased 94% to $1.26 per share, beating expectations. The stock declined following the report, partly because sales increased more slowly than anticipated, and partly because management gave somewhat conservative guidance for the third quarter.