We recently published a list of Philippe Laffont Stock Portfolio: Top 10 Stock Picks. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other stocks of Philippe Laffont’s Stock Portfolio.
Founded by Philippe Laffont, Coatue Management is a lifecycle investment platform that is focused on turning big ideas into world-shaping technology companies. Laffont established Coatue Management in 1999 and has earlier gained experience as a “Tiger Cub” while working at Julian Robertson’s Tiger Management hedge fund. The company makes investments across public and private markets and has a focus on technology, media, consumer, telecommunications and healthcare sectors. The company’s lifecycle investment platform expanded across venture, growth, thematic, and structured capital strategies.
Coatue’s Investment Approach
The company’s investment philosophy revolves around a technology-centric approach. This approach stems from the belief that technological innovation is the key factor fueling economic growth and it possesses the potential to disrupt traditional sectors. As investors, the company tends to focus on seeking out the greatest innovators with the biggest ideas. The company has recently announced its continued deep partnership with Norm Ai by leading the latest investment. Norm Ai focuses on enabling regulated businesses to reap the benefits of the GenAI, with their government-grade regulatory AI product. Overall, the mission is to enable companies to do more, and yet maintain robust compliance scrutiny.
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Industrial Base is Expected to Transform, says Coatue
As per Coatue, for the much of 20th century, the defense sector was responsible for technological breakthroughs – from the internet to GPS. However, in recent decades, its role as a key driver of innovation has diminished. That being said, the investment management firm said that the US industrial base is at a pivotal moment. A wave of innovation has been emerging, fueled by new government initiatives, groundbreaking technologies, and an urgent need for modernization. The defense sector, which was once a sector not suitable for startups and innovators, is now opening. The firm believes that organizations and instruments, such as the Defense Innovation Unit (DIU) and Other Transaction Authorities (OTA), continue to accelerate the pace of partnerships between the government and private companies.
The disruptors believe that even the most entrenched systems could be transformed with the help of innovation, placing new standards for agility, cost-efficiency, and impact, says the investment firm. Overall, it expects the industrial base of the future to revolve around unmanned/autonomous systems, nuclear-powered energy, robotic manufacturing, and a completely new space economy.
Amidst these trends, we will now have a look at the Philippe Laffont Stock Portfolio: Top 10 Stock Picks.
Our Methodology
To list the Philippe Laffont Stock Portfolio: Top 10 Stock Picks, we selected the top 10 stocks in Coatue Management’s portfolio as per its Q4 2024 13F filing. We settled on the hedge fund’s 10 biggest holdings. Finally, we ranked the stocks in ascending order based on the value of Coatue Management’s equity stakes. Additionally, we have mentioned the hedge fund sentiment around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN)
Coatue Management’s Stake Value: $2.34 billion
Number of Hedge Fund Holders: 339
Amazon.com, Inc. (NASDAQ:AMZN) is on analysts’ radars these days. BofA noted that Amazon Autos’ Director paid a visit on the Automotive News Daily Drive podcast, and mentioned about Amazon.com, Inc. (NASDAQ:AMZN)’s push into the automotive sector. Another area of growth is the company’s investments in AI, which possess the potential to fuel significant growth and efficiency improvements throughout the business segments. In e-commerce, AI can improve personalization, enhance demand forecasting, and optimize logistics. In AWS, AI capabilities can bring in more enterprise customers and increase the use of high-margin services. With respect to advertising, AI-powered tools can improve ad targeting and effectiveness for Amazon.com, Inc. (NASDAQ:AMZN).
With the e-commerce adoption increasing, mainly in emerging markets, Amazon.com, Inc. (NASDAQ:AMZN) is well-placed to leverage its logistics expertise and technological infrastructure in a bid to capture market share. Notably, Barclays analyst Kannan Venkateshwar maintained a “Buy” rating on the company’s stock, setting a price objective of $265.00. The investing community has been underestimating the AI boost that Amazon.com, Inc. (NASDAQ:AMZN) can get moving forward.
Burke Wealth Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Amazon.com, Inc. (NASDAQ:AMZN): Whereas most of the discussion around Amazon focuses on trends in its AWS business, our focus has been on the progression of margins in its retail business. Happily, both units appear to be on the upswing which drove strong fourth quarter share price performance. In AWS, Q3 sales growth was a solid 19% and the run rate of the business is now $110B. Equally encouraging is that margins were 38%, marking the third consecutive quarter that AWS operating margins were in the 36%-38% range after spending the last two years in the 28% range. This margin gain is being driven by demand for higher value applications as well a benefit from extended life usage across its data center architecture. On the retail front, the margin story remained in full force with North American margins reaching 5.9% in the third quarter and International margins delivering positive results (+3.6%) for the third straight quarter after 10 straight quarters in negative territory. CEO Andy Jassey has pointed out that Amazon’s efforts to reconfigure its distribution network from a centralized to a regional network has yielded productivity gains and that he sees no reason why retail margins in North America can’t meet or exceed previous record levels. We think a consistent run towards the high-single-digit range is likely. International retail sustaining profitability would be an added bonus and this great white whale finally seems within our grasp as Amazon reaches critical mass across numerous large international markets.”
Overall, AMZN ranks 1st on our list of top 10 stock picks of Philippe Laffont’s stock portfolio. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
