The theme of artificial intelligence (AI) has driven tremendous stock market gains over the past two years and propelled the S&P 500 to record highs in recent weeks. Investors have been buying shares of AI stocks hand over fist, aiming to benefit from what may become a trillion-dollar market.
And some of the world's most successful investors, such as Philippe Laffont of Coatue Management, have been leading the way. What's important about this is that some of their moves may offer the rest of us -- who might be overwhelmed by the wide array of AI stocks -- some investing inspiration. Of course, it would not be smart to follow every one of these investors' moves, as it's important to consider your own individual investment strategies and your comfort with risk. But, if a billionaire makes a move that suits your investment style, it could be one to follow.
Now, let's consider decisions Laffont made in the second quarter of this year. The billionaire dumped his fund's entire position in Super Micro Computer (SMCI 0.66%) and piled into four AI superpowers. Let's take a closer look.
Image source: Getty Images.
Laffont is . known as one of the "Tiger Cubs," or former employees of Tiger Management, one of the first hedge funds, to go on and open their own funds. Today, Laffont's Coatue Management, whose biggest holdings are technology stocks, oversees more than $35 billion in securities -- and any trades in these holdings must be reported quarterly to the Securities and Exchange Commission. This is great for the rest of us, as it offers a recent snapshot of a successful investor's moves.
And that leads me to the billionaire's latest actions. In the second quarter, Coatue Management did the following:
- Sold its entire position in Supermicro, a stock it bought in the third quarter of last year. This was 8,866,735 shares and made up 1.3% of the portfolio.
- Opened a new position in Oracle (ORCL -2.43%), buying 3,857,262 shares, and this represents 2.4% of the portfolio.
- Increased its position in Nvidia (NVDA -0.26%) by 34%, now owning 11,488,529 shares. This represents 5% of the holdings.
- The billionaire's fund lifted its position in CoreWeave (CRWV -3.58%) by 23% to 17,797,573 shares. That's 8% of the portfolio.
- Increased its position in Broadcom (AVGO 0.18%) by 58% to 5,647,507 shares or 4.3% of its portfolio.
The AI infrastructure buildout
We don't know the exact reason behind Laffont's moves, but it is fair to say his choices show movement toward some of the players that are likely to benefit most from the AI infrastructure buildout. Nvidia says AI infrastructure spending may reach $3 trillion to $4 trillion by the end of the decade as companies rush to accommodate demand for AI capacity.
As the leading AI chip designer, Nvidia is well positioned to see revenue growth as its graphics processing units (GPUs) power the most critical of AI tasks. Broadcom, as the maker of customized accelerators and networking equipment to connect AI nodes throughout data centers, also should play a key role in this stage of the AI boom. Oracle and CoreWeave, as cloud providers, already are seeing capacity demand soar, and this is very likely to continue.
CoreWeave is the only one of this bunch that isn't yet profitable, but this isn't shocking as it is a younger company and is in the early days of its investment and expansion story. Laffont has gone all in on CoreWeave, making it his biggest position, but it may not be the right choice for every investor. If you're more cautious, you may choose to wait on CoreWeave and instead follow Laffont into the other buys mentioned here.
Supermicro's troubles and recovery
But what about Supermicro? This billionaire wanted out. The company experienced troubles last year, with questions emerging about its accounting, but those issues have been resolved, and the provider of servers and rack scale solutions may have a bright future as AI demand marches on. Still, it may take the company time to convince investors of its strengths after it disappointed in the latest period. Tariffs and delayed revenue recognition from a customer weighed on earnings. Laffont decided against accompanying Supermicro through this potential recovery story, and if you're a cautious investor, you might make the same decision.
As I mentioned above, your own investment style should guide you as you construct your portfolio. Laffont's moves certainly give investors food for thought.
