Does Billionaire Ken Griffin Know Something Wall Street Doesn't? The Citadel Chief Sold More than Half His Broadcom Stock and Is Piling Into Another Artificial Intelligence (AI) Stock-Split Stock Instead
Ken Griffin is arguably one of the most successful investors of all time. He made a name for himself when he shorted stocks just ahead of the 1987 market crash that came to be known as “Black Monday.” His profits last year topped $7 billion as his returns of roughly 15% outpaced many of his peers. That result pales in comparison to his performance in 2022, though, when Citadel became “the most successful hedge fund ever,” according to CNN, generating profits of $16 billion, the “largest annual windfall on record.”
Griffin has been outspoken about the potential for generative AI. “This branch of AI will be game-changing for the economy,” he said, “because it will take an enormous amount of work that’s done today by people and do it in a distinctly different, highly automated, highly efficient way.” These weren’t just empty words. At the end of last year, Griffin’s top five individual stock holdings were all AI companies.
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It’s therefore worth noting that Griffin has sold more than half his stake in AI stock Broadcom (NASDAQ: AVGO), and is pouring funds into another AI stock-split stock instead.
Broadcom is one of the gatekeepers in the AI ecosystem. The company provides a wide range of products used in the cable, mobile, broadband, and data center industries. It reports that “99% of all internet traffic crosses through some type of Broadcom technology,” making it a key provider of the tech necessary to facilitate AI.
In its fiscal third quarter, which ended Aug. 4, Broadcom’s revenue grew 47% year over year to $13.1 billion, while its adjusted earnings per share (EPS) increased 18% to $1.24. Management expects its growth streak to continue, and boosted its full-year revenue forecast to $51.5 billion, which would equate to growth of 44%.
Those results help illustrate why Broadcom stock is up 64% over the past year and 188% over the past three years (at the time of this writing). The stock has risen so much, in fact, that management instituted a 10-for-1 stock split that was completed on July 15.
Wall Street is nearly unanimous in its opinion of Broadcom. Of the 42 analysts who cover the stock, 37 rate it a buy or strong buy, and none recommend selling.
That backdrop makes it all the more notable that, during the third quarter, Griffin sold more than 3.1 million shares of Broadcom — roughly 64% of Citadel’s stake in it. He still holds 1.72 million shares worth about $296 million. At the same time, he was buying another AI stock — Nvidia (NASDAQ: NVDA).
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