In case you missed it, last week marked one of the most important data dumps of the entire quarter. August 14 was the deadline for institutional investors with at least $100 million in assets under management to file Form 13F with the Securities and Exchange Commission.
While earnings season -- the six-week period each quarter where a majority of S&P 500 companies report their operating results -- can clue investors into the health of corporate America, 13Fs are invaluable in helping investors spot which stocks, industries, sectors, and trends have the undivided attention of Wall Street's greatest money managers.
Although Warren Buffett's trading activity is closely followed by investors, he's far from the only billionaire money manager with the prowess to uncover gems hiding in plain sight. For example, billionaire Philippe Laffont of Coatue Management has an extensive track record of investing in winners.
Image source: Getty Images.
What makes Laffont such an intriguing fund manager to follow is his penchant for investing in the artificial intelligence (AI) space. During the second quarter, Coatue Management's 13F shows that its billionaire boss completely exited his fund's stake in Super Micro Computer (SMCI -3.12%) while concurrently piling into the face of the AI revolution.
Super Micro Computer is shown the door by Coatue Management's billionaire chief
According to Coatue's 13F, Philippe Laffont jettisoned more than a dozen stocks from his fund's portfolio in the June-ended quarter. Arguably none of these sales is more prominent than artificial intelligence-infrastructure giant Super Micro Computer. After being a shareholder for two quarters, Laffont sent all 8,886,735 shares packing, which had a market value of more than $303 million at the end of March.
The obvious question is: Why did Laffont sell Supermicro stock?
The most logical of all catalysts is that Coatue's billionaire chief was locking in gains. During the fourth quarter, which is when Laffont oversaw the addition of Supermicro to his fund, shares traded below $20 at one point. But during the latter-half of the second quarter, shares of the company consistently vacillated between $40 and $50. It's not out of the question that Laffont netted a triple-digit percentage gain on this position.
NASDAQ: SMCI
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The concern is that profit-taking might only tell part of this story.
The reason Super Micro Computer stock nosedived in the second-half of last year had to do with allegations of fraud from a noted short-seller, as well as the company delaying the filing of its annual report and subsequent fiscal first-quarter operating results. It wasn't a good look for Supermicro, and it absolutely damaged investor trust in its management team.
The silver lining for Super Micro Computer is that an independent special committee found no evidence of wrongdoing by management in December 2024, and the company did, eventually, file its annual and first-quarter operating results without any restatements. Nevertheless, investors have been leery about placing much of a premium on Supermicro stock until it puts this event firmly in the rearview mirror.
The other possible issue that may have coerced Laffont to head for the exit is the competitive nature of AI-data center infrastructure. As production ramps up in the infrastructure space, Supermicro's customizable rack servers are likely to see their premium pricing power wane over time, which would adversely impact margins. Even with a sustained double-digit increase in year-over-year sales, waning margins runs the risk of stunting profit growth.
Image source: Nvidia.
Billionaire Philippe Laffont bought Wall Street's No. 1 stock for the first time in over two years
On the other end of the pendulum, Coatue's billionaire boss oversaw the addition of 13 new stocks to his fund's portfolio in the June-ended quarter, as well as added to 19 existing positions. Perhaps none of these existing adds stands out more than the largest publicly traded company, Nvidia (NVDA +1.34%).
What makes this addition so noteworthy is that Laffont had been a persistent seller of Nvidia stock for eight consecutive quarters prior to this most recent quarter. Over two years, he'd jettisoned more than 41 million shares, when accounting for Nvidia's 10-for-1 stock split in June 2024. But during the second quarter, Laffont grabbed 2,942,694 shares of Nvidia, which upped his fund's stake by 34%.
Just as Supermicro's potential triple-digit gain made cashing in Coatue's chips an easy decision, Nvidia's roughly 40% peak-to-trough tumble between early January and early April may have given Laffont the confidence to add to his fund's existing position. Wall Street's tariff-related swoon proved short-lived, and it's been up, up, and away for AI stocks in the subsequent four months.
There's a good chance Philippe Laffont is also enamored with Nvidia's seemingly sustainable moat as the undisputed leader in AI-graphics processing units (GPUs). Its Hopper (H100) and Blackwell chips are the preferred choice by businesses operating AI-accelerated data centers, and CEO Jensen Huang's rapid innovation timeline should allow for a new advanced AI chip to be introduced every 12 months. It's going to be difficult for other companies to compete with Nvidia's hardware on a compute basis.
NASDAQ: NVDA
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To build on this point, Nvidia's CUDA software platform has done a stellar job of keeping clients loyal to its ecosystem of products and services. On top of Hopper and Blackwell possessing compute advantages, CUDA assists developers in maximizing the compute potential of their AI-GPUs, as well as with the building and training of large language models.
But even though Nvidia is Wall Street's No. 1 stock, and billionaire Philippe Laffont appears to be increasingly optimistic about its growth prospects, there are no assurances its near-parabolic climb can continue.
For more than three decades, all next-big-thing technologies have endured early stage bubble-bursting events. In other words, it's been commonplace for investors to overestimate the utility and adoption of new technologies early in their expansion. With most businesses nowhere close to optimizing their AI solutions, it would appear that AI is the next in a long line of bubbles that'll eventually burst -- and that would be highly detrimental to Nvidia stock.
Beyond historical precedent, the other relevant issue for Nvidia is growing competition. As AI-GPU scarcity wanes due to expanding external and internal competition, Nvidia is likely to see its pricing power and gross margin dip.
