How Peter Thiel's Hedge Fund is Betting Big on AI with Apple and Microsoft

Silicon Valley venture capitalist Peter Thiel has made a striking repositioning of his hedge fund’s investment strategy. His firm, Thiel Macro, which manages $74 million in assets, recently underwent a significant portfolio rebalancing that reveals changing convictions about where artificial intelligence opportunities lie. Most notably, the peter thiel hedge fund offloaded its position in Nvidia entirely and trimmed its Tesla holdings—only to dramatically increase allocations to two software-focused tech giants: Apple and Microsoft.

The result tells a compelling story. As of the most recent quarter, Apple and Microsoft now represent 61% of the hedge fund’s total assets, with Apple comprising 27% and Microsoft accounting for 34%. For context, Thiel’s personal net worth hovers around $26 billion, making this hedge fund a relatively small component of his wealth. Yet the concentrated positioning signals deep conviction in both companies’ ability to capitalize on artificial intelligence in coming years.

This strategic shift reflects a broader market recalibration—away from chip manufacturers and electric vehicle makers, and toward companies positioned to monetize AI through software and cloud services.

The Strategic Pivot: From Hardware Makers to Software Leaders

The move out of Nvidia and Tesla, coupled with increased positions in Apple and Microsoft, represents more than a tactical rebalancing. It signals a thesis about where real AI value creation will unfold.

Nvidia remains the essential infrastructure provider for AI—its chips power data centers globally. Tesla has pursued its own autonomous driving ambitions. Yet Thiel’s hedge fund appears to have concluded that near-term returns may be better realized by companies that will directly monetize artificial intelligence features for consumers and enterprises, rather than those selling picks and shovels to the AI industry.

This positioning aligns with broader institutional investor behavior, as companies begin translating AI capabilities into revenue streams and customer adoption numbers that Wall Street can measure and reward.

Apple’s AI-Powered Services Opportunity: 27% of Holdings

Apple has long cultivated its reputation through vertical integration—designing custom semiconductors, software, and services that work seamlessly across devices. The company recently delivered strong financial performance in its December quarter, with revenue climbing 16% to $143.7 billion despite tariff headwinds. Most impressively, iPhone sales surged and Greater China revenues jumped 38% after declining in the prior year.

Perhaps most significant for the hedge fund’s conviction is Apple’s recent strategic move: the company announced it will integrate Alphabet’s Gemini AI models into Siri, its voice assistant. Rather than building large language models independently, Apple is partnering with Alphabet to enhance its AI capabilities—a pragmatic recognition of where specialized AI expertise resides.

Last year, Apple introduced Apple Intelligence, a suite of generative AI features for new iPhones and Macs currently offered at no charge. The company plans to eventually introduce premium AI features, potentially creating a new revenue stream within its already-lucrative services business. A partnership with Alphabet could prove instrumental in making these features compelling enough to justify customer payments.

However, valuation remains a consideration. At 33 times trailing earnings with projected annual earnings growth of roughly 10%, Apple stock commands a premium valuation that warrants caution for new investors at current prices.

Microsoft’s Copilot Advantage: 34% of Holdings

Microsoft commands the lion’s share of Thiel’s hedge fund allocation—34% of assets—reflecting an aggressive bet on the company’s AI-powered software strategy. The rationale becomes clear when examining recent business developments.

CEO Satya Nadella reported that copilot seat adoption surged 160% in the latest quarter, with daily active users climbing tenfold. These aren’t speculative metrics; they represent paying customers integrating AI assistants into core business workflows. Microsoft recently launched Agent 365, enabling customers to manage generative AI agents—whether built on Microsoft’s own Copilot Studio or created by partners like Adobe and ServiceNow—across multiple cloud environments.

Beyond software, Microsoft Azure represents another crucial AI leverage point. In 2024, the company consolidated its AI infrastructure into a unified platform called Foundry. Customers spending at least $1 million quarterly on Foundry increased 80% during the December quarter, suggesting enterprise demand remains robust despite economic uncertainty.

Most importantly, Microsoft holds a 27% equity stake in OpenAI and exclusive rights to its most advanced AI models, including those powering ChatGPT. This creates an unusual moat: developers who want to use OpenAI’s cutting-edge models must work through Microsoft’s Azure platform or negotiate directly with OpenAI itself. Either path benefits Microsoft. According to reporting by The Information, OpenAI shares approximately 20% of its revenue with Microsoft, creating a meaningful revenue stream from the AI pioneer’s success.

Microsoft stock declined 10% following disappointing financial results for the December quarter—capital expenditures on AI infrastructure exceeded expectations while Azure revenue growth slowed. Yet the sell-off appears overdone. Adjusted earnings increased 24%, making the current valuation of 27 times earnings look quite reasonable relative to growth prospects.

Why the Hedge Fund’s AI Thesis Matters

Peter Thiel’s hedge fund repositioning reflects a maturing thesis about artificial intelligence investment: the real returns may flow not to infrastructure providers or speculative EV makers, but to companies that can build embedded AI features into existing software and cloud platforms where customers already spend time and money.

For investors evaluating their own exposure to artificial intelligence, Thiel’s willingness to dramatically increase his hedge fund’s concentration in Apple and Microsoft—while exiting Nvidia entirely—offers a useful contrarian data point worth monitoring as the AI investment narrative continues evolving.