philippe lafont has built a reputation as one of the world’s best technology investors. His hedge fund, Coatue Management, is known for making big bets on emerging technology trends. And no trend has had a greater impact on Coatue’s recent portfolio moves than artificial intelligence.
Investors can get a sense of which companies LaFont thinks will benefit most from technology mega-trends like artificial intelligence by following Coatue’s 13-F filings with the Securities and Exchange Commission. The disclosures reveal hedge funds’ positions in publicly traded U.S. stocks each quarter. Coatue’s most recent filing shows it has been sold corewave(NASDAQ:CRWV)Once the fund’s greatest position, in favor of another great ai stock.
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Here’s what investors need to know.
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CoreWeave won’t make its public market debut until early 2025, but Coatue has held a stake in the company since 2024. This led to the cloud computing company’s Series C funding round that year. The hedge fund added to its position after the IPO, and combined with the stock’s incredible price performance, it became Coatue’s largest holding by the end of the second quarter.
But LaFont and his team began to cut down their possession in the third quarter before settling completely in the fourth quarter. The timing couldn’t have been better. The share price has fallen nearly 50% since October.
CoreWeave is an extremely risky investment. The company specializes in AI data centers. Thanks for the close relationship with NVIDIAA major shareholder, it has access to the high-powered, in-demand graphics processing units (GPUs) needed for AI training and inference. It signs long-term contracts with developers to use those GPUs even before the capacity is built. It then uses those contracts as collateral for loans to fund the data center build-out. This means it is highly leveraged relative to its earnings.
This allows it to grow quickly, but also means that any wrong move can have a significant impact on its bottom line. Investors saw this last fall after it reported delays in building a data center by one of its contractors, which led to a decline in the stock price. However, compute demand remains insatiable, and CoreWeave’s largest customers remain tied to it. So it is only a matter of time before it makes up for the revenue lost due to not being able to meet the demand.
The company sees its revenue backlog increasing from $15.1 billion at the end of 2024 to $66.8 billion at the end of 2025, including a growing portion of that revenue due more than 48 months from now. It expects revenues to more than double in 2026, but capital expenditures (capex) to grow just as fast. As a result, it must remain cash flow negative and rely on debt for continued growth. Still, the company expects its operating margins to eventually grow to between 25% and 30% in the long term.
At the current price of just 6x last sales, it may be worth taking a short position in this company with tremendous growth potential. But investors may be better off pursuing other, less risky opportunities. This seems to be LaFont’s strategy.
LaFont made several new purchases in Q4, but one of the biggest was a nearly doubling of Coatue’s stake applied material(NASDAQ: AMAT). Applied Materials is the world’s largest provider of wafer fabrication equipment. Its broad portfolio serves almost every chip manufacturer, both logic and memory chip designers.
Both sectors are seeing incredible demand right now. The biggest logic chip makers are spending heavily to build capacity to meet demand for AI accelerator chips like Nvidia’s GPUs. Taiwan Semiconductor ManufacturingFor example, it announced a capital expenditure budget of $52 billion to $56 billion this year, a step up from last year’s $41 billion. Meanwhile, demand for high-bandwidth memory is finally driving memory chip makers to expand their capacity. micron Announced 2026 capital expenditures are expected to exceed $25 billion, and management said it expects higher equipment spending in 2027.
Applied is well positioned to capitalize on that increased spending. Its equipment is best in class and it should remain that way. Applied’s scale gives it a meaningful advantage over competing manufacturers, as it is able to invest more in research and development and work closely with its customers to meet their needs. As a result, Applied is in a position to grow its market share and increase its margins.
Applied Materials management expects its equipment business to grow more than 20% this year, with continued momentum in 2027. This approach is based on longer ramp times for its customers as they build the physical capacity (cleanroom) to take delivery of the equipment. As such, investors can expect strong revenue growth over the next two years.
With the stock trading for only 30 times forward earnings, it looks cheap relative to its growth outlook. The 20% revenue growth could translate into even better bottom-line growth as Applied improves its margins. In fact, analysts expect earnings per share growth of 25% in 2027. It’s no surprise that LaFont decided to add to his position.
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adam levy There are positions in Applied Materials and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Applied Materials, Micron Technology, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has one Disclosure Policy.
