Each quarter, institutional investment firms managing over $100 million are required to file a form 13F with the Securities and Exchange Commission (SEC). I like to think about 13Fs as an itemized receipt outlining which stocks Wall Street is buying and selling.
While analyzing the filings from Millennium Management, a hedge fund run by billionaire investor Israel Englander, I came across something pretty interesting. During the third quarter, Englander trimmed Millennium's position in Nvidia by a modest 12.6%. While this may not seem like much, consider that Millennium has been a net seller of Nvidia stock for four consecutive quarters now.
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Below, I'm going to explore two other darlings in the artificial intelligence (AI) realm that Millennium has been buying lately as the fund appears to be taking a breather from Nvidia.
In my eyes Microsoft can be credited with kick-starting the AI revolution. Shortly after OpenAI released ChatGPT in November 2022, Microsoft swooped in and invested $10 billion into the start-up. Microsoft's rationale was to leverage ChatGPT's generative AI capabilities and integrate this technology throughout its ecosystem.
The biggest new product release out of Microsoft following its partnership with OpenAI is the introduction of a host of virtual assistants, called Copilot. According to Microsoft CEO Satya Nadella, "Nearly 70% of the Fortune 500 now use Microsoft 365 Copilot, and customers continue to adopt it at a faster rate than any other new Microsoft 365 suite."
Do not underestimate Nadella's words. Microsoft's first-mover advantage in the AI landscape has allowed the company to not only develop AI-powered services faster, but sell them more quickly as well. I see the rapid adoption of Copilot by the world's largest enterprises over the last two years as an extremely encouraging sign. And what's even better is that Nadella subtly alludes to the idea that Copilot's momentum is just getting started.
In this article, fellow Fool.com contributor Danny Vena notes that growth from Microsoft's Azure cloud computing business "included roughly 12 points from AI services." This metric is going to become critical for Microsoft over time.
It's well known by now that Microsoft is a dominant force in the cloud space, primarily competing with Amazon and Alphabet. As time goes on, I encourage investors not only to look at the rate at which Azure is growing relative to the competition, but to really dial in on how much of its growth can be traced back to Microsoft's AI efforts.