Wealthy entrepreneur Dan Loeb from Third Point abandoned his investment in high-yield AT&T and moved towards the most sought-after artificial intelligence (AI) growth stock in the Wall Street sector instead.

In the recent June-ended quarter, Dan Loeb, the billionaire chief of Third Point, made some notable moves in his portfolio. According to Form 13F filings, Loeb reduced 12 positions and completely kicked 10 of them to the curb, including 3,775,000 shares of AT&T. Interestingly, Loeb had purchased all these shares during the first quarter and sold every share in the subsequent quarter.

Despite selling off AT&T shares, Loeb sees potential in the telecommunications giant. Broadband may not be the growth story it was a quarter of a century ago, but it can generate abundant operating cash flow and encourage high-margin service bundling for AT&T. The expansion of 5G wireless networks is leading to a predictable increase in high-margin wireless data consumption, demonstrating steady growth in AT&T's core operations.

AT&T has also made strides in improving its balance sheet flexibility. In April 2022, the company spun off its content arm Time Warner, using operating cash flow to organically reduce debt. This move could potentially attract investors in the future.

On the other hand, Loeb purchased 1,350,000 shares of Nvidia stock in the same June-ended quarter. This aligns with reports that he acquired his position in Nvidia during the second quarter of 2025, making Nvidia the third-largest holding in his hedge fund, Third Point.

Nvidia's CUDA software platform, a toolkit that developers use to maximize and customize their Nvidia GPUs, may have kept clients loyal to the brand. The company's next-generation GPUs, such as the Hopper (H100), Blackwell, and Blackwell Ultra, are expected to account for the bulk of GPUs deployed by businesses in high-compute data centers.

However, Nvidia's reliance on AI-GPU sales to its top customers could potentially cost the company valuable data center real estate in the quarters and years to come. Many of Nvidia's top customers are internally developing AI-GPUs to use in their data centers.

Despite these potential challenges, Nvidia's ability to export AI chips to China opens new channels of revenue and gives it a reasonable shot at sustaining a 20% to 30% annualized growth rate. However, there's a possibility of an AI bubble forming and popping, which could negatively impact Nvidia stock if businesses haven't yet optimized their AI solutions or figured out how to generate a positive return on their AI investments.

Interestingly, The Motley Fool's Stock Advisor team did not include Nvidia in their list of the 10 best stocks for investors to buy now. This could be seen as a missed opportunity, given Nvidia's potential for growth in the AI sector.

Institutional investors with at least $100 million in assets under management filed Form 13F with the Securities and Exchange Commission on Aug. 14. As of the midpoint of 2025, Loeb oversaw 51 securities equating to more than $7.6 billion in market value. With Nvidia now being Third Point's third-largest holding, it will be interesting to see how Loeb's moves in the Q2 impact his portfolio in the coming quarters.

AT&T's forward price-to-earnings (P/E) ratio is 13.3, which might be considered pricey compared to its average forward P/E multiple of 8.3 over the trailing-five-year period. This could potentially make AT&T an attractive buy for investors looking for value in the telecommunications sector.

In conclusion, Dan Loeb's moves in the Q2, including selling off AT&T shares and buying into Nvidia, reflect a strategic approach to portfolio management. The potential growth in the AI sector, coupled with the steady growth in AT&T's core operations, offers a diverse investment landscape for both Loeb and other investors.

Wealthy entrepreneur Dan Loeb from Third Point abandoned his investment in high-yield AT&T and moved towards the most sought-after artificial intelligence (AI) growth stock in the Wall Street sector instead.