During his recent interview with CNBC, Stanley Druckenmiller discussed his investment success with Nvidia, which began when his young partner predicted AI’s significance over blockchain in 2022. Initially skeptical, Druckenmiller bought Nvidia, which soared with the rise of AI. Despite the stock’s meteoric rise, he sold as it hit $900 in March, noting the need for a break after a successful run.
He remains bullish on AI’s long-term potential, comparing it to the internet’s growth, expecting a significant payoff in four to five years. While AI may be over-hyped now, Druckenmiller believes its true potential is yet to be fully realized, drawing parallels to the internet’s evolution.
Here’s an excerpt from the interview:
My young partner was early with Nvidia. He called me in the fall of ’22 and said that he thought all this excitement about blockchain was going to be far outweighed by AI and I asked him how to play it.
He told me I should buy this company Nvidia. I didn’t even know how to spell it. I bought it, then a month later ChatGPT happened. Even an old guy like me could figure out okay what that meant.
So I increased the position substantially. I said in an interview in June of that year that I expected to own Nvidia for two or three years, that this was a mega trend like I had never seen, potentially bigger than the internet.
When the stock went from 150-900, I’m not Warren Buffett and I don’t own things for 10 or 20 years. I wish I was Warren Buffett, and 150-900 we did cut that position and a lot of other positions in late march.
I just need a break, we have had a hell of a run, and a lot of what we recognized has become recognized by the marketplace now. Powell was… we expected Powell to come back and repivot, which he subsequently did.
But no, long-term, we’re as bullish on AI as we ever have been. You just wonder if we were all sitting here in 1999 talking about the internet, for anybody who was talking about it, I don’t think anybody would have estimated it would be as big as it got in 20 years. We didn’t have the iphone, we didn’t have Uber, we didn’t have Facebook, yadda, yadda.
And yet if you bought the Nasdaq in ’99, it went down 80% before that all came to fruition. That’s not going to happen with AI, but it could rhyme. AI could rhyme with the internet as we go through all this capital spending we need to do. The payoff while it’s incrementally coming in by the day. The big payoff might be four to five years from now.
So AI might be a little over-hyped now but under-hyped long term.
You can watch the entire discussion here:
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Tyler Fields is your internet guru, delving into the latest trends, developments, and issues shaping the online world. With a focus on internet culture, cybersecurity, and emerging technologies, Tyler keeps readers informed about the dynamic landscape of the internet and its impact on our digital lives.
