Billionaire Daniel Loeb's Third Point Boosts AI Holdings in Q1, Re-buys Alphabet After Selling Entire Stake

Billionaire investor Daniel Loeb runs the New York-based hedge fund Third Point, which he founded in 1995 with an initial capital of $3.4 million. Loeb's activist bets and value-oriented investing strategies helped shape the hedge fund with $7.84 billion in assets under management across 40 securities at the end of Q1 2024. Third Point returned 7.8% in the Offshore Fund in the same quarter.

According to the hedge fund's latest 13F-HR filings for the quarter ended March 31, Loeb appeared to have bulked up his AI stock holdings. He increased his stake in Amazon and Meta Platforms and bought 3 million shares of Alphabet after selling the Google parent's entire stake in Q4 2023. Third Point's position in Alphabet is worth $452.79 million.

The trade reflects Loeb's trademark opportunistic investing play. Third Point, in its Q1 investor letter, mentioned making a "substantial investment" in Alphabet when shares were down in early March due to the controversies around the launch of Gemini. This AI image-generation tool caused a social media storm.

Loeb decided to capitalise on Alphabet's stock price drop. "Assigning primacy to a small operational misstep while demoting the fact that the company has been building world-class capabilities in AI for over a decade created an attractive entry point for a long-term investor," Third Point noted.

The hedge fund believes Alphabet has the potential to leverage its AI capabilities to "unify, enhance and better monetise the entire suite of products," as it considers the "moment when Gemini takes a seat at the economic table is approaching."

"We shared our views on AI's transformational potential in recent letters, and it is a key element of the thesis for nearly half of our equity positions today. Unlike in past periods of technological paradigm shifts, this new technology [AI] favours incumbents who are deploying their financial and intellectual war chests to win the AI arms race," the hedge fund opined.

Third Point's Amazon holdings increased by 900,000 shares quarter-over-quarter (QoQ) to 5.1 million shares in Q1, valued at $919.93 million. Meanwhile, Loeb also bumped stake in Meta by 76,000 shares QoQ to own 1.23 million shares, valued at $600.17 million.

Meta stocks have gained impressively by 293% since the beginning of 2023 amid the AI revolution. The company's net income in Q1 grew by 117% year-over-year (YoY) to drive a 27% YoY increase in quarterly revenue to $36.45 billion.

The Facebook parent company's Q2 revenue guidance was between $36.5 billion and $39 billion. For the full-year 2024, the company also lifted its total expenses and capex guidance to expedite its AI roadmap, as well as due to elevated infrastructure and legal costs in an active US and EU regulatory landscape.

Meanwhile, Amazon's Q1 net increased revenue by 13% YoY to $143.4 billion, complemented by a 17% YoY sales growth from the Amazon Web Services (AWS) segment to $25 billion. Interestingly, Amazon's operating and net income more than tripled YoY to reach $15.3 billion and $10.4 billion, respectively.

Amazon President and CEO Andy Jassy said: "The combination of companies renewing their infrastructure modernisation efforts and the appeal of AWS's AI capabilities is reaccelerating AWS's growth rate (now at a $100 billion annual revenue run rate); our Stores business continues to expand selection, provide everyday low prices, and accelerate delivery speed (setting another record on speed for Prime customers in Q1) while lowering our cost to serve."

Moreover, Accenture is partnering with AWS to help firms, particularly in highly regulated industries, integrate and scale generative AI technology with Amazon Bedrock. AWS is also working with Nvidia to develop an AI supercomputer, Project Ceiba, built on Nvidia's Blackwell platform for the chipmaker's AI R&D purposes.

Third Point also opened a fresh position in Marvell Technology in Q1. The hedge fund bought 1.52 million shares of the semiconductor firm, valued at $108 million. Marvell's shares are up almost 50% versus the S&P 500's 30% gains from the sales of its data processing units for data centres, the cloud sector, 5G and automotive industry, and AI markets.

As a data infrastructure specialist in the semiconductor space, Marvell designs the architectures for networking systems, storage solutions, and custom application-specific integrated circuit (ASIC) chips for data centres. They outsource chip fabrication to third-party production foundries. Last week, the firm announced earnings for the quarter ended May 4.

"Marvell delivered first quarter fiscal 2025 revenue of $1.161 billion, above the mid-point of guidance, driven by stronger than forecasted demand from AI. Our data centre revenue grew 87% YoY, with the start of a ramp in our custom AI programs complementing our substantial base of electro-optics revenue," said Matt Murphy, Chairman and CEO of Marvell Technology.

He continued: "For the second quarter of fiscal 2025, we are guiding an 8% sequential increase in revenue at the mid-point, fueled by ramping custom AI silicon. We see a favourable setup for the second half of this fiscal year, driven by continued growth in data centre and the beginning of a recovery in enterprise networking and carrier infrastructure."

While Loeb slightly trimmed the fund's position in Microsoft despite the company's transformational AI growth, the stock retains a significant share in Third Point's portfolio.

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