Altimeter Capital has sold its Microsoft Corp. (NASDAQ:MSFT) holdings to aggressively fund positions in AI hardware giants like Nvidia Corp. (NASDAQ:NVDA) and SK Hynix, signaling a strategic rotation from software into the booming compute and memory supercycle.
Shifting Capital On AI Supercycle
Despite praising Microsoft’s leadership, Altimeter CEO Brad Gerstner explained, in a conversation with CNBC, that allocating capital in today’s market requires strict prioritization. With 80% of Altimeter’s capital now deployed in memory, logic, and compute, the firm had to pull funds from elsewhere.
“You have to make choices in this market. We only have so much capital,” Gerstner said. He noted that Microsoft was investing “a little less aggressively in capex” to drive future AI growth, while the broader market holds lingering “skepticism about software today.”
The pivot has already paid off. Gerstner pointed out that the stocks Altimeter rotated those dollars into, specifically memory manufacturer SK Hynix, have performed exceptionally well, making the rotation a highly profitable move.
Nvidia Is Not In ‘Bubble Territory’
Addressing fears that the massive rally in semiconductor stocks has gone too far, Gerstner strongly defended Nvidia’s valuation. Even amidst fierce competition from hyperscaler chips and upcoming IPOs like Cerebras, he argued that Nvidia’s efficiency on a “token per watt” basis keeps it unmatched.
“Look at Nvidia at 195 bucks, Nvidia is trading lower than it was six months ago,” Gerstner noted, citing its forward earnings multiples against a trillion dollars in future order guidance. “It’s hard to say that that’s in bubble territory.”
Instead of pulling back, Gerstner remains firmly bullish on the hardware giant. “I think Nvidia is terribly under-owned. I think it’s terribly undervalued today,” he said. “And so we’re happy to sit in that and to own it.”
Looking Past ‘Boom And Bust’
While acknowledging that high-flying tech stocks can tempt retail investors to take quick profits, Gerstner emphasized that the current earnings of memory and chip businesses have true longevity.
Rather than a traditional “boom and bust” cycle, Altimeter views the current hardware demand as a durable trend stretching through 2029, heavily rewarding investors who are willing to let their core winners compound.
How Has MSFT Performed In 2026?
Shares of MSFT have fallen by 14.47% year-to-date, while the Nasdaq 100 has advanced by 9.70% over the same period. It closed 0.14% lower on Monday at $413.62 apiece.
Over the last month, MSFT was up 10.75%, but lower by 19.58% over the last six months. Benzinga’s Edge Stock Rankings indicate that MSFT maintains a strong price trend in the short term but a weak trend in the medium and long terms, with a good quality score.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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