Nvidia or Microsoft: Ken Griffin Bets Big on One Top AI Stock

AI-led disruption is real, but any claims the tech is about to devour all it encounters should probably be taken with a grain of salt. That, in any case, is the opinion of billionaire Ken Griffin, who recently argued that the AI boom is being driven as much by narrative as by tangible productivity improvements.

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Griffin, who has a net worth of about $49.5 billion and is the founder, CEO and Co-Chief Investment Officer of hedge fund Citadel, added that this take is not intended to diminish AI's power, but he believes there's plenty of hype attached to AI, and it serves to rationalize massive levels of spending.

The hyperscalers are projected to spend nearly $700 billion this year on AI-related capital expenditure. Is it hype? "Of course," Ken Griffin said, citing the unprecedented amount of capital now flowing into AI infrastructure. "You're not going to generate this kind of spend unless you're going to make a promise you're going to profoundly change the world."

Yet, despite the skepticism, Griffin isn't sitting on the sidelines. AI stocks make their presence felt in the Citadel portfolio, and recently Griffin has been reshuffling his holdings of AI stalwarts Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT), betting big on one name while reducing his exposure to the other. So, let's find out what's behind the investing heavyweight's latest moves.

Nvidia

The days when Nvidia was primarily a gaming-focused company now feel like a distant era, even though it wasn't that long ago that gaming still made up the majority of its revenue. It was only from 2022 onwards that the data center segment became the primary driver of revenue, fueled, of course, by growing AI demand.

As it turned out, the gaming GPUs Nvidia pioneered were ideally suited for AI. Their design for highly parallel graphics processing made them ideal for the large-scale calculations AI models need. Nvidia's years of optimizing performance and memory for gaming gave it a head start, helping the company become a major enabler of the AI boom.

That head start made its chips the industry standard, but Nvidia is more than just hardware. CUDA, its proprietary parallel computing platform, has been a key differentiator. Because developers build AI models and applications specifically optimized for CUDA, researchers, hyperscalers, and enterprises become embedded in Nvidia's software stack. That ecosystem effect makes Nvidia far more influential than a typical chipmaker.

Famously, the uniqueness and excellence of its offerings have turned Nvidia into the world's most valuable company, although in recent times, the stock's performance has been more muted, as the market has mulled over the possibility of overheated valuations and an AI bubble.

While Griffin has called out the hype around AI, he evidently does not think it applies to Nvidia. During Q4, Citadel bought 11,739,611 NVDA shares, upping its stake by 120%, a position currently worth $2.2 billion.

That move will make sense to Cantor's C.J. Muse, an analyst ranked in 11th spot among the thousands of Wall Street stock experts, who thinks the stock is primed to push higher over the coming months.

"We are still in the very beginning of the next industrial revolution driven by proliferation of Agentic + Physical AI (likely driving the largest buildout in history)," the 5-star analyst said. "So the setup is extremely positive, particularly when we reflect on shares only trading 21x/16x expected CY26/27 earnings… Our sense is that this earnings report will mark the beginning of an inflection point for shares, followed by the latest frontier models built on Blackwell released in March highlighting NVDA's technological leadership, GTC San Jose in March further highlighting the company's leadership in AI, and finally a likely Data Center revenue guide update for CY27 from Jensen as early as Computex in early June given our vision for AI lead times to continue to extend given the insatiable demand for AI Accelerated Compute."

With that backdrop, Muse rates NVDA shares Overweight (i.e., Buy), and his $300 price target implies 59% upside over the next 12 months. (To watch Muse's track record, click here)

Overall, aside from just one Hold and one Sell, all 37 other recent analyst reviews are positive, giving the stock a Strong Buy consensus rating. Even the more measured $261.84 average price target suggests shares could climb 39% over the coming year. (See Nvidia stock forecast)