- Stanley Druckenmiller told CNBC he pared some of his Nvidia exposure in late March.
- The investor is confident in the stock's worth, but sees market enthusiasm in AI as overhyped for now.
- But AI will be a long-term play to pursue over the years, with a big payoff down the road.
Stanley Druckenmiller has taken a step back from Nvidia, but not because he's lost faith in the stratospheric stock, he said.
Instead, the trimming reflects his current hesitation in artificial intelligence investing, as enthusiasm for this theme has gotten a bit excessive for now:
"The big payoff might be four to five years from now," the billionaire investor told CNBC on Tuesday. "So AI might be a little overhyped now, but underhyped long term."
Nvidia, a semiconductor company, has become central to emerging AI technology,with most of the software run by the firm's chips. Since ChatGPT first came out in November 2022, the company's share price has soared over 561%.
Druckenmiller was among Wall Street's heaviest hitters to promote its rise, saying in June that the stock was worth holding for at least a few years. At that time, his comments stood out against a slew of analysts who saw the firm as overvalued — though it turned out the stock was just halfway to its current price of around $900.
"We did cut that and a lot of other positions in late March," he now said, noting that the rollback happened when the stock hit its current levels that month. "I just need a break. We've had a hell of a run. A lot of what we recognized has become recognized by the marketplace now."
But according to the Duquesne Family Office head, AI is still the investing play to focus on over the coming years, as it will mirror the internet's impact at the start of the century.
Over the past year Druckenmiller has also held exposure to AI large-caps such as Microsoft and Alphabet.