We recently compiled a list of the Billionaire Stan Druckenmiller Is Betting On AI Infrastructure, Tobacco and Industrial Stocks. In this article, we are going to take a look at where Seagate Technology Holdings plc (NASDAQ:STX) stands against the other stocks Billionaire Stan Druckenmiller is betting on.
When it comes to growth offerings, there are few money managers on Wall Street whose opinion carries more weight on the matter than Stanley Druckenmiller, the chief of New York-based investment firm Duquesne Capital. Druckenmiller oversees a 13F portfolio at his hedge fund that was worth close to $3 billion at the end of the second quarter of 2024. As the AI craze sweeps Wall Street, Druckenmiller has outlined his bullish long-term thesis on the new technology, recently appearing in a program on news platform CNBC to claim that the AI revolution was bigger than the excitement around blockchain, the internet, or other previous tech-related breakthroughs in the recent past.
During his appearance on the show, the billionaire noted that anybody who was talking about the internet back in 1999, before the advent of high-speed wireless connections and smart devices, could not have estimated that it would become as big as it did in the twenty or so years since that time. He further highlighted how the NASDAQ, the tech-heavy benchmark index, plunged 80% during the dotcom crisis at the turn of the millennium before offering investors handsome returns in the long-term. The money manager compared this to the AI universe and said that with the capital spending on the new tech, the big payoff in the sector might take four or five years to materialize.
Druckenmiller further added that AI was a trend like he had never seen before but cautioned listeners that he was not Warren Buffett and did not own things for 20 years – a reference to the long term investing strategy of the Oracle of Omaha. The remarks were in defense of his 13F activity during the first quarter of 2024. The billionaire told CNBC that he needed a break from some AI-focused positions because there had been a hell of a run, and a lot of what his fund recognized had become recognized by the marketplace. However, Drucknemiller clarified that he remained bullish on AI in the long-term.
Our Methodology
For this article, we scanned the stock portfolio of Duquesne Capital according to the 13F filings submitted at the end of the second quarter of 2024. We selected the top 10 stocks from this portfolio. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician configuring a network-attached storage drive.
Seagate Technology Holdings plc (NASDAQ:STX)
Number of Hedge Fund Holders: 44
Duquesne Capital’s Stake: $181,268,000
Seagate Technology Holdings plc (NASDAQ:STX) engages in the provision of data storage technology and infrastructure solutions in Singapore, the United States, the Netherlands, and internationally. The rise of solid state drives over the past few years had turned attention away from hard disk drives, one of the most-selling products of the company. However, the management of the tech firm believes that the AI data center can prove to be beneficial for the shares in the long term. In the recent earnings call, the company claimed that over the next several years, the volume of AI-generated content was expected to increase and also shift towards more imagery and videos, which can be up to 1,000 times larger than text. These trends, per the firm, would bode well for HDD demand over the long term, as HDDs remained the most cost-effective means to house and subsequently use mass capacity data.
There seems to be some truth to these claims. According to consensus estimates, the revenue growth for Seagate Technology Holdings plc (NASDAQ:STX) is forecast to climb by 37% next year and 13% in fiscal 2026. The impact on earnings over this time period is even more noticeable with the forecast for 2024 EPS of $0.96, growing to $5.64 by next year. Investment advisory Morgan Stanley has an Overweight rating on the shares with a price target of $133.
Overall STX ranks 5th on our list of stocks Billionaire Stan Druckenmiller is betting on. While we acknowledge the potential of STX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than STX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.