Out With The Old.

Stanley Druckenmiller has never been particularly sentimental about stocks.

His latest 13F is a pretty good reminder.

The legendary investor spent Q2 reshuffling his portfolio — opening dozens of new positions, walking away from nearly two dozen others, and making some surprisingly big changes along the way.

For someone who averaged roughly 30% a year over three decades without a losing year, it’s a lot of changing his mind in three months.

And buried inside all that buying and selling is a pretty interesting picture of where Druckenmiller sees opportunity now.

So, we went through the whole portfolio.

Let’s see what survived the shuffle.⇩

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Out With The Chips, In With… AI?

Druckenmiller didn’t exactly leave the AI trade.

He rearranged it.

During Q2, he sold out of Broadcom and Micron, while Nvidia — one of his most successful AI bets — remained noticeably absent.

But the money didn’t leave AI.

Instead, Druckenmiller added or opened positions in Amazon, Alphabet, Taiwan Semiconductor and AMD.

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The Stock He Says He Regrets Selling…

— and still won’t buy 🤔

✱ Druckenmiller admits he sold Nvidia too soon.

Druckenmiller bought Nvidia in late 2022, rode the AI boom for hundreds of millions of dollars, and sold the entire position by 2024.

He later said he’d consider buying Nvidia again if the valuation came down.

And it did.

Nvidia briefly fell to around 17× forward earnings earlier this year — considerably cheaper than where it had traded during much of the AI boom.

Druckenmiller still didn’t buy it.

Instead, Q2 brought a new chip name into the portfolio:AMD $AMD ( ▼ 0.56% ).

But not exactly with both feet.

72,900 shares. Just 0.8% of the portfolio.

So AMD doesn’t look much like a replacement for his old Nvidia bet.
If anything, it makes the rest of the portfolio more interesting.

Because while Druckenmiller remains cautious around the chipmakers, he’s putting considerably more money into the companies buying, designing and manufacturing the infrastructure around them.

And that brings us to Amazon, Alphabet and TSMC. ↓

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Buying the Buyers.

Why he moved from Broadcom into Amazon and Alphabet instead?

At first, the move seems a little backwards.

Broadcom  $AVGO ( ▼ 0.66% ) makes the custom AI chips that companies like Alphabet use. So if AI spending keeps climbing, owning Broadcom would seem like a pretty straightforward way to benefit.

But the balance of power may be shifting.

The biggest AI spenders increasingly want more control over the chips going into their own data centers — including who designs them and who makes them.

→ Amazon $AMZN ( ▲ 0.02% ) is a good example.

CEO Andy Jassy said the largest number of new chips entering Amazon’s data centers this year will be its own Trainium chips, rather than Nvidia GPUs or other off-the-shelf alternatives.

→ Alphabet $GOOG ( ▲ 0.53% ) is doing something similar.

It has worked with Broadcom for years on its custom TPUs, but recently added Marvell for specialized inference chips.

That gives the hyperscalers something valuable: options.

They can use Nvidia GPUs, develop their own custom chips, or spread production across multiple partners depending on what works best.

So rather than betting on which chipmaker wins the next round of AI spending, Druckenmiller is putting more money into the companies making those spending decisions in the first place.

And The Price Wasn’t Bad Either↓

That puts a 4.1-turn gap between the two — with Alphabet trading at roughly a 20% lower earnings multiple than Amazon.

→ Both companies are spending enormous sums building AI infrastructure, both have massive cloud businesses, and both are developing their own custom chips.

→ Both were trading well below their historical valuations — largely because investors were worried about how much cash the AI buildout was swallowing.

And, as it turns out, quite a lot.

That uncertainty is part of what has pushed their valuations down.

The Bill↓.

Here’s what that AI buildout is costing.

Those cheaper valuations suddenly make a little more sense.

Amazon burned $7.6 billion in free cash flow over the past 12 months.
Alphabet went negative for the first time in its history as a public company last quarter.

Building AI infrastructure is expensive.

But there’s another rather large number on the other side of the ledger:

→ $514B — Alphabet remaining performance obligations

→ $496B — Amazon backlog

That’s nearly $1 trillion in contracted business between them.

For now, investors can see the bill. Druckenmiller appears to be betting on the payoff.

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