Billionaire Stanley Druckenmiller Exited 38 Stocks, Including Palantir, but More Than Quintupled His Stake in This Trillion-Dollar Artificial Intelligence (AI) Stock

Key Points

• Quarterly-filed Form 13Fs offer a way for investors to follow the buying and selling activity of Wall Street's leading asset managers.

• Billionaire Stanley Druckenmiller dumped his entire stake in Palantir during the March-ended quarter -- and profit-taking may only explain part of the story.

• Meanwhile, Duquesne's chief more than quintupled his fund's stake in another critical company within the artificial intelligence (AI) arena.

• 10 stocks we like better than Palantir Technologies ›

Information is the lifeblood of Wall Street. However, trying to analyze earnings reports from hundreds of influential public companies, while also keep a watchful eye on U.S. economic data releases and proposed policy changes from the Donald Trump administration, can be overwhelming and allow something of importance to slip through the cracks.

Two months ago, on May 15, institutional investors with at least $100 million in assets under management were required to file Form 13F with Securities and Exchange Commission -- and investors might have missed it. This filing allows investors to see which stocks Wall Street's most-successful money managers purchased and sold during the March-ended quarter. In other words, it's an easy way for investors to spot which stocks, industries, sectors, and trends have the undivided attention of the market's top fund managers.

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Though Warren Buffett has the largest following among top-tier asset managers, he's not the only billionaire investor with a knack for spotting amazing deals. Investors also closely follow Duquesne Family Office's Stanley Druckenmiller for ideas.

Image source: Getty Images.

Druckenmiller was especially active during the first quarter. He oversaw the complete sale of 38 stocks, including one of the hottest artificial intelligence (AI) companies on the planet, Palantir Technologies (NASDAQ: PLTR). Meanwhile, one of the few stocks he piled into was a trillion-dollar AI company.

Billionaire Stanley Druckenmiller cleaned house in the March-ended quarter

Though Duquesne Family Office's billionaire chief invests in a broad swath of industries, there was certainly a tech vibe to his selling activity in the first quarter. Arguably the most jaw-dropping of these sales was jettisoning all 41,710 shares of Palantir Technologies.

The simple fact that Druckenmiller reduced his fund's number of holdings from 78 to 52 over a three-month period speaks volumes. It strongly implies that Duquesne's leader isn't thrilled with the stock market pushing to one of its priciest valuations in history. Duquesne Family Office has an average hold time of less than nine months for its 52 holdings, which suggests Druckenmiller and his team aren't shy about locking in gains.

With regard to AI-data-mining specialist Palantir, its shares have climbed by an almost unfathomable 2,370% since the start of 2023. Most megacap stocks don't tack on $360 billion in market value in such a short time frame. Palantir's parabolic ascent gave Druckenmiller every reason to cash in his chips.

But there's probably more behind this selling activity than just a desire lock in gains.

In a May 2024 interview with CNBC, Duquesne's head investor summarized the AI movement as being overhyped in the short run but likely under-hyped over the long-term.

Since the proliferation of the internet in the mid-1990s, every game-changing investment opportunity has endured an early stage bubble-bursting event. This is a reflection of investors overestimating how quicky a new technology will gain utility and/or widespread adoption. Though AI spending is robust, it's fairly evident that most businesses haven't yet optimized their AI solutions, nor are many generating a positive return on their AI investments. In short, a bubble is likely brewing.

The good news for Palantir is that an AI bubble-bursting event wouldn't cripple its cash flow. Its Gotham segment locks in revenue via multiyear contracts with federal governments. Meanwhile, its newer Foundry platform for businesses is subscription-based. Nevertheless, weak investor sentiment in the wake of a bubble-bursting event would almost certainly drag down Palantir stock.

The other issue that can't be swept under the rug is Palantir's valuation. Palantir closed out the previous week at a price-to-sales (P/S) ratio of 127! For context, this is somewhere between three and four times higher than where other megacap companies saw their bubbles burst during the dot-com era. Druckenmiller likely expects a sizable correction in Palantir stock.

Image source: Getty Images.

Duquesne's billionaire investor upped his stake in this trillion-dollar stock by 457%

On the other end of the spectrum, Stanley Druckenmiller welcomed 12 new stocks to his fund, as well as added to existing stakes in 14 others during the first quarter. While many of these adds were modest, this wasn't the case with world-leading chip fabrication company Taiwan Semiconductor Manufacturing (NYSE: TSM), which is commonly known as "TSMC."

Druckenmiller has purchased shares of TSMC for three consecutive quarters, beginning in the third quarter of 2024. But in the March-ended quarter, he really began depressing the accelerator. Duquesne's 13F shows 491,265 shares were purchased, representing a 457% increase from the prior three-month period. It would appear that while Druckenmiller believes AI is overhyped in the short run, he's nevertheless found a new favorite artificial intelligence stock.

The investing lure for TSMC is the key role it plays in the proliferation of advanced AI graphics processing units (GPUs). Taiwan Semi is in the process of expanding its monthly chip-on-wafer-on-substrate (CoWoS) capacity from 35,000 units in 2024 to an estimated 135,000 units by 2026. CoWoS is a technology necessary for the packaging of high-bandwidth memory in high-compute data centers.

While expanding CoWoS capacity almost fourfold in a two-year period is impressive, it still may not be enough to satiate enterprise demand. However, it can only mean good things for TSMC's order backlog and pricing power. During the second quarter, 60% of the company's net sales came from high-performance computing, which is up from 52% in the comparable quarter from 2024.

Though it's easy to get really excited about the future of AI and the role this trillion-dollar company will play in facilitating the manufacture of advanced GPUs, it's important not to overlook that Taiwan Semi is a well-diversified machine.

For instance, 27% of TSMC's net sales during the June-ended quarter traced back to wireless chips and accessories used in next-generation smartphones. Even though growth in smartphone sales isn't what it used to be, the consistent evolution and upgrade cycles associated with smartphones leads to consistent operating cash flow and modest long-term growth potential.

The same can be said about TSMC's automotive and Internet of Things segments, which collectively accounted for 10% of its net sales during the first half of 2025. As new vehicles and household appliances become more technology dependent, chip demand is only going to grow.

Taiwan Semiconductor Manufacturing is also reasonably valued, when compared to the likes of Palantir. Whereas Palantir is trading at approximately 215 times forward-year earnings, TSMC can be scooped up for roughly 22 times forecast earnings in 2026. While a forward price-to-earnings multiple of 22 is higher than TSMC's historical average, the company's penchant for blowing past Wall Street's expectations suggests its stock may head even higher.

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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.