Benzinga - by Adam Eckert, Benzinga Staff Writer.
Short Hills Capital's Steve Weiss sold out of his Nvidia Corp (NASDAQ: NVDA) position as he saw Microsoft Corp (NASDAQ: MSFT) as a bigger beneficiary of the AI boom.
Why Sell Nvidia: Nvidia shares have more than tripled since the beginning of the year on the back of unprecedented demand for AI chips.
Monday on CNBC's "Fast Money Halftime Report," Weiss highlighted the strong move in Nvidia stock and noted it's currently trading on momentum.
"Given my cautious view on the market, I just thought that the momentum trades are going to suffer," Weiss said on the show.
Although he agreed the mega caps look positioned for a rally into the end of the year, he explained more people are likely to put money to work in names that haven't run as much.
Everyone seemed to already be in Nvidia, so it's not clear who the marginal buyer was going to be in the short term, he said. The chipmaker also faced increasing competition from other tech giants such as Microsoft, he added.
Check This Out: Despite OpenAI's Potential Shift, Citi Analyst Predicts Nvidia's Continued Dominance in AI GPU Market
Why Buy Microsoft: Weiss believed Microsoft is positioned to benefit "far more" than Nvidia in terms of AI demand, especially after the company starts manufacturing its own chips.
New reports suggested Microsoft plans to unveil its first in-house AI chip at its annual developers’ conference next month. The chip was reportedly similar to Nvidia GPUs and would help lessen Microsoft's dependency on Nvidia chips.
Weiss told viewers that he expected Microsoft to release an entirely new slate of products focused on AI in the near term. Those products would be subscription-based based and people would be forced to renew even as prices go higher, he said. With the company moving to make its own chips, he indicated Microsoft was positioned to be king.
"Microsoft is the number one beneficiary of AI. Let me repeat that, number one, not Nvidia," Weiss said.
NVDA, MSFT Price Action: Nvidia shares closed Monday down 1.07% at $452.73, while Microsoft closed up 0.78% at $329.82, per Benzinga Pro.
Photos: Courtesy of Microsoft & Nvidia.
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