AI Stock That's Surged 483,000% Since IPO Gets Billionaire Thiel's New Conviction—Here's Why He Dumped Nvidia and Tesla

A Billionaire Investor’s Bold Portfolio Shift in the AI Era

Peter Thiel, the legendary tech entrepreneur behind Palantir Technologies, has sent a clear signal about where artificial intelligence opportunities lie. Through his hedge fund Thiel Macro, the billionaire just executed three pivotal moves that reveal his evolving thesis on AI winners and losers.

The hedge fund completely liquidated its entire Nvidia stake during Q3. It trimmed Tesla by 76%. But here’s what caught everyone’s attention: Thiel initiated a substantial position in Microsoft, which now represents 34% of the fund’s invested assets. The kicker? This is a stock that has already delivered a staggering 483,000% return since its March 1986 IPO—yet the billionaire believes it has more to run.

Why Microsoft? The AI Monetization Story That Works

Microsoft’s appeal lies in something often overlooked: the company has already figured out how to turn artificial intelligence into actual profit. Unlike many AI-exposed stocks trading on pure hype, Microsoft has embedded generative AI copilots into its productivity software, cybersecurity tools, enterprise resource planning systems, and low-code development platforms.

The numbers reflect real adoption. Monthly active users of Copilot hit 150 million in Q3, nearly doubling from 100 million just one quarter prior. CEO Satya Nadella’s disclosure reveals explosive momentum across the enterprise market.

Beyond software, Microsoft Azure is capturing significant cloud market share. Since ChatGPT launched in late 2022, Azure has gained roughly 3 percentage points of market share despite infrastructure constraints. The company continues to expand data center capacity aggressively, and Morgan Stanley’s latest CIO survey identifies Azure as the cloud platform most likely to gain additional share over the next three years.

Valuation-wise, Wall Street projects 16% annual adjusted earnings growth through fiscal 2027. At 33 times forward earnings, that’s admittedly not cheap—but the company beat consensus earnings estimates by an average of 8% in the last four quarters, justifying the premium.

Nvidia: Dominant But Facing the Exit

Thiel’s decision to sell out of Nvidia entirely might seem counterintuitive given the company’s unassailable position in AI accelerators. Nvidia commands over 80% market share in this critical segment, and its full-stack approach—combining best-in-class GPUs with adjacent hardware like CPUs, networking, and software tools—creates a moat that competitors struggle to penetrate.

The bears, however, worry about custom AI chips from Broadcom and Marvell Technology designed for hyperscalers like Alphabet and Amazon. While these alternatives exist, their higher total cost of operations limits their threat to Nvidia’s dominance.

A more compelling reason for Thiel’s exit may be geopolitical risk. Export restrictions have barred Nvidia from selling advanced chips into China, the second-largest AI market globally. Recent commentary suggests President Trump could open the door to H200 GPU exports to China, but the regulatory uncertainty clearly weighed on the hedge fund’s decision calculus.

Despite the hedging concern, Wall Street expects Nvidia to grow adjusted earnings at 67% annually through fiscal 2027, with the stock trading at just 46 times earnings—seemingly cheap for that growth trajectory. The company has beaten consensus earnings by 3% over six consecutive quarters, demonstrating execution strength. Many observers believe Thiel exited prematurely.

Tesla: A Long-Term Robotics Bet, But With Near-Term Headwinds

Tesla presents a different challenge. Global electric vehicle sales surged 33% through October 2025, yet Tesla’s revenue declined and market share dropped 5 percentage points. The company ceded leadership to Chinese automaker BYD—a blow from which recovery looks unlikely.

Yet Tesla’s investment narrative hinges on autonomous driving and humanoid robotics, not traditional EV sales. Tesla’s vision-only robotaxis, which rely on camera inputs alone rather than radar and lidar systems like Waymo, promise lower costs and faster scaling. There’s no need to pre-map cities—the vehicles learn as they operate.

Robotaxis remain confined to San Francisco and Austin, despite Musk’s previous claim of serving half the U.S. population by end-2025. Plans to enter Dallas, Houston, Las Vegas, Miami, and Phoenix suggest rollout is gradually accelerating. Morgan Stanley analysts view Tesla as the technology leader in a market potentially worth $4 trillion by 2040.

Critically, while the billionaire trimmed Tesla substantially, it remains his largest single position. Wall Street forecasts just 8% annual earnings growth through 2026, pricing the stock at an eye-watering 235 times earnings. This valuation only makes sense for investors with a 10-to-15-year time horizon, betting that autonomous vehicles and robotics reshape daily life.

The Takeaway

The billionaire’s moves spotlight a market in flux. Microsoft demonstrates that AI monetization through enterprise software and cloud services already works today. Nvidia, despite dominance, faces regulatory uncertainties that may justify taking chips off the table. Tesla’s autonomous future remains tantalizing but remains years from material contribution to earnings.

For investors, Thiel’s rebalancing offers a lesson: the most powerful AI opportunities may not always be in the flashiest names or the stocks with the highest short-term momentum.