Riding the coattails of the so-called super investors isn’t a bad strategy so long as you don’t blindly follow their lead. Performing your own due diligence is essential before putting your money at risk. Just because the smart money is buying doesn’t mean it isn’t a dumb investment. Still, plenty of their purchases are solid guru stock picks.
Below are the three biggest holdings in the portfolio of one of the world’s largest asset management firms, T. Rowe Price (NASDAQ:TROW). It has almost $816 billion in assets under management (AUM). While it charges fees to its customers for its investment advice, you don’t need to pay for special insider access. Simply look at their latest 13F filings with the Securities & Exchange Commission to see where their money is flowing. It’s not real-time decision-making but it is a way to narrow down the vast universe of stocks into a more manageable set of ideas.
Just make sure you don’t need the money you want to invest to pay for bills or emergencies. With a minimum three to five-year investment horizon, and preferably a decade or more, you might find these stocks Wall Street’s elite are buying are ones you want to piggyback onto as well.
Apple (AAPL)
Although T. Rowe Price money managers have been selling down their stake in Apple (NASDAQ:AAPL) over the past several quarters, they still own an enormous tranche of stock. Apple represents 4.4% of the firm’s total value or some $35.5 billion worth of stock. That equates to 207 million shares.
That’s about one-quarter of the amount Warren Buffett owns through Berkshire Hathaway (NYSE:BRK-A, BRK-B). And even the Oracle of Omaha has been selling down his shares in the tech giant. Last quarter, he sold about $20 billion worth of shares. It’s not the first time he’s sold his favorite stock, but he usually does it for tax reasons.
Still, T. Rowe Price has an average buy price of $74.71 per share, giving it a nice 156% return on its investment. It might be just taking some profits off the table. Like Buffett, it will probably be holding on for the long haul.
And why not? Apple remains a highly profitable company and just announced a huge $110 billion stock buyback program. With its newest iPhone model due out later this year, reportedly possessing new artificial intelligence (AI) features, it could become a hugely popular device.
Nvidia (NVDA)
Speaking of AI, Nvidia (NASDAQ:NVDA) has become synonymous with the technology. Whereas it was once the premier videogame chipmaker (it still is), that was long ago overshadowed by its absolute dominance of artificial intelligence.
Nvidia owns the market for data center graphics processing units (GPU). Analysts at Wells Fargo estimate the chipmaker owns 98% of the market but expects that drop to between 94% and 96%. While rivals Advanced Micro Devices (NASDAQ:AMD), Intel (NASDAQ:INTC) and even Arm Holdings (NASDAQ:ARM) are bringing their chips to market and will eat away at Nvidia’s hold on the space, it will still reign supreme.
T. Rowe Price has also been paring back its position in Nvidia, dropping its holdings from 56.5 million shares a year ago to 46.2 million today. That’s still a whopping $41.7 billion position in the semiconductor stock, good enough for 5.1% of the investment firm’s portfolio.
There is nothing on the horizon for Nvidia to suggest T. Rowe Price will significantly slash its position. Indeed, with some of the most powerful new chips to ever be created, Nvidia has a large runway of growth still to come though you might want to hold off to see where its first-quarter earnings land the chipmaker.
Microsoft (MSFT)
The biggest holding in T. Rowe Price’s portfolio belongs to Microsoft (NASDAQ:MSFT). The money manager owns 142.2 million shares at an average buy price of $83.57 per share. That means Microsoft stock weighs in at $59.8 billion, good enough for the top spot and representing 7.3% of total AUM.
Microsoft has become a premier AI stock in its own right, even if not in the same way that Nvidia is. The tech star became an early adopter of the technology and quickly grasped its importance to the company’s future trajectory. Microsoft integrated AI into all of its products, services and platforms and it continues to explore new ways to exploit it.
Microsoft is offering for sale to its Azure cloud customers AI chips from AMD as an alternative to Nvidia. It will make available AMD’s MI300X chips, while also selling its own Maia AI chip. Microsoft will soon introduce a new processor, too, called Cobalt 100, which reportedly offers 40% better performance than competitor designs. And it just announced it was introducing new computers featuring chips that can run A.I. applications natively.
These are just some of the many good reasons why Microsoft holds such a near and dear position in T. Rowe Price’s portfolio.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
