Billionaire Stanley Druckenmiller Just Dumped Tesla and Piled Into a "Magnificent Seven" Stock That's Crushing the Stock Market This Year

Key Points

• Stanley Druckenmiller, who formerly ran Duquesne Capital, is a frequent investor in big tech names.

• Druckenmiller remains disciplined on valuation and is not afraid to sell a stock that he thinks has gotten ahead of its skis.

• Microsoft is really starting to execute on its artificial intelligence playbook.

• 10 stocks we like better than Microsoft ›

Hedge funds recently filed their latest batch of 13F forms with the U.S. Securities and Exchange Commission, divulging what stocks they held at the end of the second quarter. Comparing those forms to the prior set allows investors to see what stocks hedge funds and billionaires have bought and sold in any given quarter.

The market is always curious to see how the leading names in the investing world are allocating capital. Few billionaire investors elicit more interest than Stanley Druckenmiller. A protege of George Soros, Druckenmiller consistently generated some of the highest annual returns out there at Duquesne Capital, which he founded and ran for decades. Now, he operates the Duquesne Family Office, which manages his own billions.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

In the second quarter, Druckenmiller exited his position in Tesla (NASDAQ: TSLA) and piled into another "Magnificent Seven" stock that has crushed the broader stock market this year.

Dumping Tesla

The Duquesne Family Office didn't own its stake in the electric vehicle (EV) maker for too long. The fund initiated its Tesla position in the fourth quarter of 2024 and closed it in the second quarter. Druckenmiller is not afraid to trade in and out of stocks, or to sell a stock if he feels it has become too expensive, as he did in the past with Nvidia.

Image source: Getty Images.

Unlike many investors in this red-hot market, Druckenmiller has always been a close observer of valuations, and Tesla is certainly one of those names that has for many years traded at meteoric valuations. As of Thursday, the stock was trading at about 190 times expected forward earnings. Meanwhile, Tesla's core EV business has been struggling in recent quarters. With the federal $7,500 EV tax credit set to expire at the end of the third quarter, the EV industry broadly could continue to struggle.

However, many investors seem less concerned about Tesla's EV business and more focused on how the company's other initiatives, such as robotaxis and humanoid robots, could power its results in the future.

Tesla intends for its self-driving robotaxis to form the backbone of a new autonomous ride-hailing fleet, giving it access to a huge market in the personal transport space. Some early analyses indicate that Tesla's approach to autonomous vehicle systems is much cheaper than rivals like Waymo. Tesla has begun to deploy robotaxis (though not its Cybercabs, which it has yet to produce) in Austin and San Francisco. However, while these vehicles are driving autonomously, they have reportedly been geofenced to stay within set boundaries of those cities, and have been operating with humans monitoring them remotely thus far.

Given the short period of time that Druckenmiller held Tesla and the stock's volatility this year, it's likely that he and his team saw a short-term trading opportunity, unless there was a significant change in their thesis recently.

Buying a Magnificent Seven outperformer that has executed this year

Duquesne's second-largest purchase in the second quarter also happened to be the second-largest company in the world by market cap -- Microsoft (NASDAQ: MSFT). In the quarter, Duquesne bought just over 200,000 shares of the tech giant for a value of roughly $100 million as of June 30. Microsoft is now up by about 20% this year, crushing the S&P 500's roughly 8% gain.

I think many investors were initially skeptical about the tech conglomerate's artificial intelligence (AI) investments and whether or not they would pay off. But its latest quarterly results indicate they are starting to. In Q2, revenue from Microsoft's Azure and other cloud services division, which contains a lot of the company's AI-related business, surpassed $75 billion, a 34% increase from the prior-year period. Companies and developers can access large language models from OpenAI through Azure, and can easily integrate generative AI capabilities into workloads.

"Enterprises are beginning to move from proof of concepts to enterprisewide deployments to unlock the full ROI [return on investment] of AI," Microsoft CEO Satya Nadella said on the company's second-quarter earnings call. "And our AI business has now surpassed an annual revenue run rate of $13 billion, up 175% year over year."

Microsoft currently trades at a forward price-to-earnings ratio of almost 33, which is close to its five-year average of slightly below 32. It's executing on AI and is also one of the only companies with a higher credit rating on its debt than the U.S. government. With all of those advantages, I see Microsoft as one tech stock that investors can buy and hold forever.

Should you invest $1,000 in Microsoft right now?

Before you buy stock in Microsoft, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Microsoft wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $650,499!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,072,543!*

Now, it’s worth noting Stock Advisor’s total average return is 1,045% — a market-crushing outperformance compared to 182% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 18, 2025

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.