Jeff Yass' AI Semiconductor Shuffle: From Nvidia to Micron

In the rapidly evolving world of artificial intelligence (AI) semiconductors, billionaire investor Jeff Yass, co-founder of Susquehanna International Group (SIG), has made a significant move by reducing his stake in Nvidia Corporation (NVDA) by 29% during the third quarter of 2024. The fund sold approximately 5.6 million shares, totaling around $722 million. Simultaneously, Yass and his team increased SIG's position in Micron Technology (MU) by 46%, scooping up 2.2 million shares. Let's delve into the reasons behind this strategic shift and its implications for the AI semiconductor landscape.

Nvidia's dominance in AI semiconductors is undeniable, with its graphics processing units (GPUs) powering most AI workloads. However, the increasing competition from other chip manufacturers, such as AMD and Intel, has put pressure on Nvidia's market share. Many of Nvidia's own customers, including Microsoft, Amazon, Meta Platforms, and Alphabet, are investing heavily in their own chip infrastructure, which could potentially slow down Nvidia's growth prospects. This competitive landscape might have influenced Yass' decision to trim his position in Nvidia.



On the other hand, Micron Technology, a semiconductor manufacturer specializing in memory and storage solutions, presents an attractive alternative for investors like Yass. As AI applications become more sophisticated, the demand for efficient storage and memory solutions grows. Large language models and generative AI applications require substantial data input and processing, creating a need for reliable and high-performance memory solutions. Micron's unique focus on memory and storage solutions positions it well to capitalize on the long-run story surrounding AI.

Micron's financial profile, with noticeable peaks and valleys in revenue trends, might appear less consistent than Nvidia's. However, the company's expertise in memory and storage solutions is poised to benefit from the growing adoption of AI in data centers and cloud infrastructure. Major cloud providers like Amazon, Microsoft, Oracle, and Alphabet are investing heavily in data center infrastructure and their own AI chips, driving demand for memory and storage solutions. As these projects come to fruition over the next several years, Micron appears well-positioned to benefit significantly.

In conclusion, Jeff Yass' decision to reduce Susquehanna's stake in Nvidia and increase its position in Micron Technology demonstrates a strategic shift in his AI semiconductor portfolio. By diversifying into Micron, Yass acknowledges the broader AI story, where memory and storage solutions are crucial, and AI investments will drive demand for these components over the next several years. Investors looking to capitalize on the AI semiconductor sector should consider the unique opportunities presented by both Nvidia and Micron, as well as the diverse landscape shaped by increasing competition and evolving consumer demands.