Ken Griffin ranks 33rd on the Bloomberg Billionaires Index with a net worth exceeding $42 billion. He is also the founder and CEO of Citadel, the most profitable hedge fund in history as measured by net gains since inception. Those bona fides make Griffin a good source of inspiration, and retail investors can follow along with his trades by reviewing quarterly Forms 13F.
Interestingly, while Nvidia (NASDAQ: NVDA) and Taiwan Semiconductor (NYSE: TSM) are both positioned to benefit from demand for artificial intelligence (AI) infrastructure, Griffin bought one stock and sold the other in the third quarter.
- Nvidia: Griffin bought 4.7 million shares, increasing Citadel's position by 194%.
- Taiwan Semiconductor: Griffin sold 135,556 shares, trimming Citadel's stake by 7%.
Those trades suggest Griffin's confidence in Nvidia increased substantially during the third quarter, while his confidence in Taiwan Semiconductor may have waned slightly. But the third quarter ended in September, so let's take a closer look at where both AI stocks stand today.
Nvidia: The stock Ken Griffin bought
Nvidia is best known for its graphics processing units (GPUs), chips that can perform technical calculations more quickly and efficiently than central processing units (CPUs). GPUs are used to accelerate complex data center workloads like artificial intelligence (AI), and Nvidia GPUs are the industry standard. The company has more than 95% market share in AI accelerators, according to Vijay Rakesh at Mizuho.
What truly sets Nvidia apart is vertical integration that spans GPUs, CPUs, and networking equipment, such that the company effectively builds entire data centers. Also, its proprietary CUDA software streamlines AI application development across domains ranging from robotics to drug discovery. That approach lets Nvidia develop systems with a superior total cost of ownership, according to CEO Jensen Huang.
Nvidia delivered a phenomenal financial report for the third quarter of fiscal 2025, which ended in October 2024, beating estimates on the top and bottom lines. Revenue increased 94% to $35 billion as data center sales surged 112%, and automotive and robotics sales climbed 72%. Meanwhile, non-GAAP earnings more than doubled to reach $0.81 per diluted share.
Looking ahead, Wall Street expects Nvidia's adjusted earnings to increase at 48% annually through fiscal 2026, which ends in January 2026. That makes the current valuation of 55 times adjusted earnings look surprisingly reasonable. Patient investors should consider buying a position in this stock today.
Taiwan Semiconductor: The stock Ken Griffin sold
Taiwan Semiconductor Manufacturing Company (TSMC) provides foundry services to the semiconductor industry, meaning it shoulders the capital-intensive burden of fabricating chips designed by its customers. TSMC accounted for 62% of foundry sales in the second quarter, up 4 percentage points from the same period last year, according to Counterpoint Research.
TSMC consistently offers the most advanced portfolio of process technologies, meaning its manufacturing capabilities are constantly on the leading edge. For instance, its 3-nanometer process is currently the most advanced node on the market, and its 2-nanometer process will reach volume production next year. That advantage has helped TSMC win customers like Apple and Nvidia, which positions the company as a major beneficiary of the AI boom.
TSMC reported strong financial results in the third quarter, beating estimates on the top and bottom lines. Revenue increased 36% to $23.5 billion due to strong momentum across the high performance computing, smartphone, and internet of things product categories. Meanwhile, gross margin expanded 350 basis points due to cost improvement efforts, and net income increased 50% to $1.94 per ADR.
On theearnings call CEO C.C. Wei told analysts, "Our business in the third quarter was supported by strong smartphone and AI related demand for our industry leading 3-nanometer and 5-nanometer technologies." He also said revenue from AI server chips was on pace to more than triple for the full year, evidencing its ability to benefit as businesses build out their AI infrastructure.
Looking ahead, Wall Street expects TSMC's earnings to grow at 23% annually through 2025. That makes the current valuation of 30 times earnings look reasonable. Importantly, earnings accelerated sequentially in the recent quarter (from 30% to 50%), but Ken Griffin didn't know that would happen, which may explain why he trimmed Citadel's position. Regardless, investors should consider buying a few shares today.
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*Stock Advisor returns as of November 18, 2024
Trevor Jennewine has positions in Nvidia. The Motley Fool has positions in and recommends Apple, Nvidia, and Taiwan Semiconductor Manufacturing. 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.
