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With the S&P 500 and Nasdaq in correction territory, you may not be feeling very optimistic about investing. But now is actually an excellent time to buy stocks because many of yesterday's highfliers are today's dirt cheap deals. So, a time of market decline represents the perfect moment to get in on a quality company at a discount, with the next step being to hang on for the long term to benefit.
And today, one billionaire investor in particular may be taking advantage of this market moment. Billionaire Stanley Druckenmiller has a long track record of success, delivering an average annual return of 30% over 30 years at Duquesne Capital Management without any money-losing years. He now manages $3.7 billion as head of the Duquesne family office.
But last fall, Druckenmiller said he was disappointed with one of his latest investing moves. He sold an artificial intelligence (AI) stock that's soared more than 1,900% over the past five years -- and he expressed interest in getting back in on the growth story at the right valuation. Druckenmiller has likely noticed the significant drop in this player's price in recent weeks. In my opinion, he might be buying this stock for a bargain during the Nasdaq correction.
Druckenmiller's "big mistake"
Druckenmiller holds a number of tech stocks in his portfolio and has spoken favorably of AI, saying he's a long-term believer in the technology. So, he clearly aims to be involved in this high-growth story. Yet, last year, Druckenmiller reduced his holding of AI giant Nvidia (NASDAQ: NVDA) and finally closed out the position in the third quarter. The investor originally bought his Nvidia stake in the fourth quarter of 2022, and it rose about 700% during its time in his portfolio. The reason for Druckenmiller's actions? He thought its valuation had gotten too rich.
Last year, Nvidia traded for as much as 50 times forward earnings estimates. But even with Nvidia trading at that level, Druckenmiller still considered his move "a big mistake," as he said in a Bloomberg interview, adding that he would consider buying the stock again at the right valuation.
Since Nvidia stock has fallen 10% in a month, leaving the shares trading at 26 times forward earnings estimates, I believe that moment may be now. I wouldn't be surprised if Druckenmiller took this opportunity to return to Nvidia, aiming to benefit from the next wave of growth ahead.
A $1 trillion opportunity
It's important to remember that even though Nvidia's revenue has soared in the double and triple digits quarter after quarter, the company is still in the early chapters of the AI story. Nvidia chief Jensen Huang has said that $1 trillion of outdated computers need to be updated to accommodate accelerated computing, leaving a lot of room for growth ahead.