The CEO of the tech-focused firm Altimeter Capital says the firm has exited Microsoft (MSFT) and is rotating proceeds into a trio of AI hardware plays.
In a new CNBC interview, Brad Gerstner says Altimeter’s decision to drop Microsoft is a capital allocation decision rather than a loss of conviction in the company’s leadership.
“We’ve owned Microsoft a lot over the course of the last few years. I think Satya [Nadella] and Amy [Hood] are doing a terrific job. And we’ll own Microsoft again. But you have to make choices in this market. We only have so much capital.”
Gerstner notes that Altimeter has focused its capital instead on the South Korean semiconductor manufacturer SK Hynix, CoreWeave (CRW) and Nvidia (NVDA).
“We only have so much capital. 80% of our capital has been in memory and logic and compute, companies like Nvidia, companies like SK hynix, companies like CoreWeave, etc.
And so that’s consumed a lot of capital. The capital has to come from somewhere. And when we looked at Microsoft, right, we thought they were investing a little less aggressively in CapEx to drive that future AI growth. And on the other side, a big part of the business is software. And there’s a lot of skepticism about software today. Now, I happen to think that they’re seeing tremendous activity on the software, the protocol activity side of the house.
I think that business will accelerate in the future. But we were right in trading out of it a bit because the stock has come in, and the stocks that we rotated those dollars to, like SK Hynix has done incredibly well.”
Looking more closely at Nvidia, Gerstner believes NVDA is mispriced by the market.
“Look, Nvidia is at $195. Nvidia is trading lower than it was six months ago. It’s hard to say at 13 or 14 times fully taxed earnings on a business that’s giving you guidance of a trillion dollars of future orders that that’s in bubble territory. I think NVIDIA is terribly under-owned. I think it’s terribly undervalued today. And so we’re happy to sit in that and to own it.”
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