Thiel Macro, a hedge fund led by Palantir co-founder Peter Thiel, has a significant percentage of its portfolio invested in Apple and Microsoft.
Billionaire Peter Thiel, a Silicon Valley venture capitalist and entrepreneur, is best known for his role in co-founding Palantir Technologies. He still owns more than 3% of the company’s Class A shares, as well as 30% of the Class B shares and 33% of the Class F shares.
Thiel also runs a hedge fund, Thiel Macro, that manages $74 million. He made some interesting trades in the third quarter. First, he sold shares of Nvidia and Tesla, closing his position in the former, and trimming his position in the latter. Second, he added shares of Apple (AAPL 0.13%) and Microsoft (MSFT 2.86%)
Those two artificial intelligence (AI) stocks account for 61% of the hedge fund’s assets: 27% in Apple and 34% in Microsoft. Of course, the portfolio itself represents a microscopic percentage of Thiel’s $26 billion net worth, but the position sizing still points to high conviction in both companies.
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Apple: 27% of Thiel Macro’s portfolio
Apple has cultivated a reputation for premium consumer electronics devices because of design expertise that spans hardware, software, and services. Particularly important is its ability to design custom semiconductors, which improve performance and power efficiency of its iPhone, iPad, and Mac products, and help the company control costs.
Apple reported strong financial results in the first quarter of fiscal 2026 (ended Dec. 27), beating estimates on the top and bottom lines. Revenue increased 16% to $143.7 billion despite tariffs, driven by strong growth in the iPhone and services segments. Also, sales in China increased 38% after declining during the previous fiscal year. Meanwhile, GAAP net income increased 18% to $2.84 per diluted share.
Recently, Apple said it will use Alphabet’s Gemini models to bring artificial intelligence (AI) features to its voice assistant Siri, abandoning plans to build the large language models in house. While that strategy shows Apple’s limitations where AI innovation is concerned, it should allow the company to monetize AI more effectively, potentially driving sales growth in the services segment.
In late 2024, Apple introduced a suite of generative AI features for new iPhones and Macs. Those capabilities, called Apple Intelligence, are currently free. But the company plans to add a premium version in the next few years, according to Bloomberg. The partnership with Alphabet could prove instrumental in enhancing Apple Intelligence features beyond Siri.
However, Apple stock is expensive. Its present valuation of 33 times earnings is quite rich for a company whose earnings are projected to increase at 10% annually over the next three years. For that reason, I would avoid this stock until the price is more reasonable.
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Microsoft: 34% of Thiel Macro’s portfolio
Microsoft is exploiting is position as the largest enterprise software company to monetize generative AI copilots, conversational assistants integrated into applications for office productivity, enterprise resource planning, and business intelligence. CEO Satya Nadella said copilot seats increased 160% in the most recent quarter, and the number of daily active users increased tenfold.
Also, Microsoft doubled down on its status as the IT backbone for most companies with the recent launch of Agent 365, a tool that lets clients manage generative AI agents whether they were built with Microsoft Copilot Studio or developed by partners such as Adobe and ServiceNow. CEO Satya Nadella told analysts, “We are the first provider to offer this type of agent control plane across clouds.”
Beyond software, Microsoft Azure is exploiting its status as the second largest public cloud to monetize AI. In 2024, the company consolidated its AI services and models into a single platform called Foundry, which lets developers build, customize, test, and manage their AI applications. The number of customers spending at least $1 million per quarter of Foundry increased 80% in the December quarter.
In addition, Microsoft owns a 27% equity stake in OpenAI and exclusive rights to its most advanced models, including those that power ChatGPT. That means developers must use Azure (or work directly with OpenAI) if they want to incorporate those models into custom applications. Microsoft wins either way. OpenAI reportedly shares 20% of its revenue with Microsoft, according to The Information.
Microsoft stock fell 10% after the company delivered disappointing financial results for the December quarter. Capital expenditures related to AI infrastructure exceeded Wall Street’s expectations, yet Azure revenue grew more slowly than anticipated. But the selling seems overdone. Microsoft’s adjusted earnings increased 24%, which makes the current valuation of 27 times earnings look quite reasonable. Patient investors should consider purchasing a small position.