Billionaire Philippe Laffont runs Coatue Management, a hedge fund that beat the S&P 500 (^GSPC +0.11%) by an astonishing 94 percentage points over the past three years. That makes Laffont a great source of inspiration. Investors can review Form 13F filings to track his trades.
In the third quarter, Laffont sold 1.6 million shares of Nvidia (NVDA +1.98%), reducing his stake by 14%. He also bought 76,000 shares of the iShares Bitcoin Trust (IBIT 0.44%), a BlackRock fund that tracks the price of Bitcoin (BTC 2.34%).
Those trades are interesting because Nvidia dominates the market for artificial intelligence infrastructure, and one Wall Street expert expects Bitcoin's price to increase 20,300% by 2045. Here's what investors should know.
Image source: Getty Images.
1. Nvidia
When OpenAI launched ChatGPT in late 2022, it quickly made clear the disruptive potential of generative artificial intelligence (AI). Demand for AI infrastructure has since been insatiable, and few companies have benefited more than Nvidia. Its graphics processing units (GPUs) are the industry standard in accelerating AI workloads in data centers, and the company leads the market in generative AI networking gear.
Going forward, Nvidia is likely to maintain its dominant market position as the AI revolution evolves from generative use cases (e.g., creating media content like text and images) to physical use cases (e.g., autonomous robots and self-driving cars). Nvidia provides not only the data center hardware, but also the embedded chips and adjacent software tools needed for physical AI.
CEO Jensen Huang earlier this year explained the company's full-stack strategy. "We build all three computers: the training computer, the simulation computer, and the robotics computer or self-driving car computer." He also said Nvidia provides the software stack, models, and algorithms that run on those hardware products. No other company has a more comprehensive portfolio.
Wall Street expects Nvidia's earnings to increase at 37% annually over the next three years. That makes the current valuation of 44 times earnings look quite reasonable. I'm not sure why Philippe Laffont sold Nvidia in the third quarter. Maybe he simply wanted to take some profits. Whatever the reason, it would be wrong to assume he lost confidence. Nvidia is still his eighth largest holding and accounts for 4.5% of his portfolio.
NASDAQ: NVDA
Key Data Points
2. iShares Bitcoin Trust
Strategy Chairman Michael Saylor is one of the most vocal Bitcoin bulls on Wall Street. He has so much confidence in the cryptocurrency that his company owns 650,000 BTC, which makes it a Bitcoin investment vehicle for all intents and purposes. Earlier this year, Saylor told CNBC Bitcoin could return 30% annually over the next 20 years to reach $19 million by 2045. That implies a total return of about 20,300% from its current price of $93,000.
The investment thesis for Bitcoin is simple: Its fixed supply of 21 million coins means its price will increase as demand increases, and the advent of spot Bitcoin ETFs is driving demand among retail investors, institutional investors, and companies. Also, the Trump administration's crypto-friendly policies -- including the creation of a strategic Bitcoin reserve -- have instilled investors with confidence.
State Street strategists write, "Institutions are embracing Bitcoin for its diversification, long-term growth, and improving regulatory clarity." Between Q3 2024 and Q3 2025, the number of large asset managers (i.e., $100 million-plus in assets) with positions in the iShares Bitcoin Trust rose 150%, and the amount of BTC held by public and private companies doubled. I think those trends will not only persist but intensify in the coming years.
As a caveat, Bitcoin has historically been a very volatile asset. In fact, we are currently in the middle of a substantial drawdown. Bitcoin reached a record high in October, then dropped more than 30% in November. It currently trades 27% below its high. I think that dip creates a buying opportunity for patient investors, but only those comfortable with extreme volatility.
