Billionaire Philippe Laffont is a Founder & Portfolio Manager at Coatue Management, L.L.C. His fund’s top 10 holdings comprise of mostly tech stocks which depicts his love for technology. His thirst for technology was such that after graduating from MIT with a computer science degree he applied for a job at Apple multiple times but was rejected every time. This pushed him towards another calling, which was to manage a hedge fund and its holdings.
Philippe Laffont’s journey towards investing started when he moved to Spain where he started working at McKinsey. It was at this time when he learned about the “boom of the PC” and about the three pioneers of PC industry namely IBM, Dell and Microsoft. He decided to invest in these stocks which churned out more money than he was earning at that time. This led to his endeavors as an investor. In order to learn more about being an investor he got a chance to work at a mutual fund without pay where he learned about different terminologies related to the industry to “get his foot in the door”.
After his employment ended in Julian Robertson’s organization, he moved on to gather funds to start investing from his friends and family but most of his funds came from professional brokers and people who admired his entrepreneurial spirit. This led to the launch of his company on January 1, 2000, with $50 million at its disposal and the fund's AUM now stands at $50 billion. His investment philosophy is to provide longevity and good returns for the investors; and to have investors that would bet on him for the long term. Philippe Laffont’s philosophy of helping out people is visible in his efforts to advise people on investing and he believes in helping any new tech “kid” that could become the next Tiktok.
In his interview at the Bloomberg Invest Philippe Laffont said that he is conflicted about whether small or big companies will be the AI winners. According to him the history of technology indicates that the big gets bigger but new companies have also made it through like Facebook or TikTok. He thinks that AI isn't overhyped and the valuations aren't out of whack right now. Here is what he said:
"It's true that the mentions of AI in every TV and and written form is very high. And so one could say, Wow, if everybody talks about it, it must be priced in. And the only reason why more positive is I remember when I invested in Apple in 2009 when the iPhone first came out and for years people told me, Why are you invested in Apple? Everybody talks about Apple. And obviously it had an incredible run. So I actually think that sometimes because someone speaks a lot about something, it might be actually a good sign versus an overhyped sign."
Philippe Laffont thinks the next phase of AI will be real estate with data centers and especially utilities with power. Another phase of AI, according to Philippe Laffont would be robots with artificial brains called humanoids. The technology hedge fund manager also made the following prediction which has a huge implication for the semiconductor stocks:
"I've made a lot of mistakes, You know, betting on these new technologies like AR/VR turns out to be not so big. 3D printing turns out to be not so big. My estimate is $100 trillion was invested in today's dollar in the PC, CPU based infrastructure. All this is going to get ripped out to put $100 trillion or more in our GPU based infrastructure."
Our Methodology
Stocks mentioned in this article were picked from the investment portfolio of Coatue Management at the end of the first quarter of 2024. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. A database of around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2024 was used to quantify the popularity of each stock in the hedge fund universe.
A close up of a complex looking PCB board with several intergrated semiconductor parts.
Advanced Micro Devices, Inc. (NASDAQ:AMD)
According to Citi Bank’s analysts, Advanced Micro Devices, Inc. (NASDAQ:AMD) is expected to see its market share of the data center GPU market rise by 10% to $15 billion. A Buy rating was also highlighted by Citi analyst Christopher Danely on the stock with a $176 price target.
Coatue Management holds around 6.7 million shares in AMD that is worth $1.2 billion. Among the hedge funds being tracked by Insider Monkey, Texas-based investment firm Fisher Asset Management is a leading shareholder in Advanced Micro Devices, Inc. (NASDAQ:AMD) with 28 million shares worth more than $5 billion.
Currently Advanced Micro Devices, Inc.’s (NASDAQ:AMD) 2025 EPS forecast depicted the stock to be trading at around 28.6X forward P/E ratio, which is lower given Wall Street analysts expect Advanced Micro Devices, Inc. (NASDAQ:AMD) growth to be 33% this year and 59% next year.
Meridian Contrarian Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its fourth quarter 2023 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor chip maker specializing in central processing units (CPUs), which are considered the core component of most computing devices, and graphics processing units (GPUs), which accelerate operations running on CPUs. We invested in 2018 when it was a mid-cap value stock plagued by many years of underperformance due to lagging technology and lost market hi share versus competitors Intel and Nvidia. Our research identified that changes and investments made by current management under CEO Lisa Su had, over several years, finally resulted in compelling technology that positioned AMD as a stronger competitor to Nvidia and that its latest products were superior to Intel’s. We invested on the the belief that AMD’s valuation at that that time did not reflect the potential for its technology leadership to generate significant market share gains and improved profits. This thesis has been playing out for several years. During the quarter, AMD unveiled more details about its upcoming GPU products for the AI market. The stock reacted positively to expectations that AMD’s GPU servers will be a viable alternative to Nvidia. Although we pared back our exposure to AMD into strength as part of our risk-management practice, we maintained a position in the stock. We believe AMD will continue to gain share in large and growing markets and is reasonably valued relative to the potential for significantly higher earnings.”
Overall AMD ranks 8th on our list of billionaire Phillipe Laffont's top stock picks. You can visit Billionaire Phillipe Laffont’s Top 10 “Mostly AI” Stock Picksto see the other stocks that are on hedge funds’ radar. While we acknowledge the potential of AMD as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
