In this article, we will discuss Philippe Laffont’s Top 10 Stock Picks.
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.
Philippe Laffont of Coatue Management
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).
Philippe Laffont Stock Portfolio: Top 10 Stock Picks
10. Tesla, Inc. (NASDAQ:TSLA)
Coatue Management’s Stake Value: $877.02 million
Number of Hedge Fund Holders: 126
Tesla, Inc. (NASDAQ:TSLA) has got its stock upgraded from TD Cowen analyst Jeff Osborne, with the analyst expecting a potential sales boost thanks to Musk’s political influence. The analyst upped the price objective from $180 to $388, while reiterating a “Buy” rating. TD Cowen is confident in Tesla, Inc. (NASDAQ:TSLA)’s long-term growth prospects, despite Musk’s political factors impacting short-term demand. Through the expansion into under-penetrated markets, the company can offset potential losses and fuel future sales growth. Overall, the analyst opines that the company’s growth in regions possessing low EV adoption can help mitigate losses in the stronger markets.
Elsewhere, Cantor Fitzgerald analyst Andres Sheppard believes that the recent selloff in Tesla, Inc. (NASDAQ:TSLA)’s stock offers an attractive entry point for investors having >12-month investment horizon and investors who can withstand volatility. The analyst believes that there are significant catalysts that are expected to come up. These include the launch of the Robotaxi segment, and FSD expansion in China. Overall, this analyst has a bullish stance on Tesla, Inc. (NASDAQ:TSLA)’s self-driving endeavors.
Tsai Capital, an investment management company, released its Q4 investor letter. Here is what the fund said:
“Tesla, Inc. (NASDAQ:TSLA) (TSLA—Year of First Purchase: 2020) We’ve owned Tesla since February 2020 and initially paid an average of about $41.66 per share5 . Tesla is a leading AI company that has formidable competitive advantages across various sectors, including electric vehicles, software, and energy storage.
A true outlier, Tesla operates in an entirely unconventional way, often creating market confusion and attracting criticism from short sellers and from those who mistake the company for what it is fundamentally not—a traditional car manufacturer.
Under the visionary leadership of Elon Musk, Tesla has adopted a scale-economies-shared business model, deliberately lowering prices, enhancing the customer value proposition, driving adoption, and expanding the total addressable market…” (Click here to read the full text)
9. Reddit, Inc. (NYSE:RDDT)
Coatue Management’s Stake Value: $1.06 billion
Number of Hedge Fund Holders: 87
Reddit, Inc. (NYSE:RDDT) operates a digital community in the US and internationally. Needham analysts reiterated their “Buy” rating on the company’s stock with the price objective of $220.00. The analysts have spotted numerous positives. These include Reddit, Inc. (NYSE:RDDT)’s search revenue upside, international expansion, video content strategy, Generative AI (GenAI) initiatives, developer platform, improvement in margins, and data licensing opportunities, among others.
Elsewhere, Loop Capital analyst Alan Gould highlighted Reddit, Inc. (NYSE:RDDT)’s healthy growth potential. As per the analyst, the company’s improved advertising tools and data licensing opportunities can act as potential growth catalysts. The company’s data licensing business possesses strong growth potential, thanks to the elevated demand trends for diverse, real-world data to train AI models. Notably, Reddit, Inc. (NYSE:RDDT)’s significant archive of user-generated content, covering several topics and perspectives, remains a unique resource for AI researchers and developers.
Columbia Threadneedle Investments, an investment management company released a Q4 2024 investor letter. Here is what the fund said:
“Reddit, Inc. (NYSE:RDDT) was the single best-performing stock for the fund, as the stock surged during the quarter, with significant outperformance following its stellar quarterly earnings release. The capital-light social news aggregation platform — and the ninth most-visited website in the world — reported quarterly revenue, user growth and profit margins that came in considerably higher than even the most bullish of estimates, and the company also provided forward-looking guidance that came in well ahead of expectations on most metrics. After earlier announcing a data licensing partnership with AI pioneer OpenAI, investors ‘up-voted’ the evolving AI narrative for Reddit after gaining a better understanding of its unique and hard-to-replicate trove of content generated by its growing and increasingly global user base.”
8. GE Vernova Inc. (NYSE:GEV)
Coatue Management’s Stake Value: $1.27 billion
Number of Hedge Fund Holders: 111
GE Vernova Inc. (NYSE:GEV) is an energy company that provides various products and services that generate, transfer, orchestrate, convert, and store electricity. Fitch Ratings believes that the company’s extensive installed base, primarily in gas power, garners significant high-margin services revenue. It continues to streamline the cost structure and focus on R&D. The firm also believes that investments in energy infrastructure in GE Vernova Inc. (NYSE:GEV)’s European and US markets continue to increase because of higher energy usage and adjustments to the electrical grid as intermittent renewable energy sources connect to the transmission system.
GE Vernova Inc. (NYSE:GEV)’s healthy market position in gas power and grid equipment offers a strong foundation for long-term growth. Its expertise in such areas remains in line with the ongoing energy transition and the requirement for reliable baseload power. With countries seeking to balance renewable energy integration with grid stability, GE Vernova Inc. (NYSE:GEV)’s gas power solutions can play a critical role in offering flexible and efficient power generation. Also, the expected super-cycle in gas power can significantly fuel the company’s revenues and market share.
Fidelity Investments, an investment management company, recently released its Q3 2024 investor letter. Here is what the fund said:
“Among individual holdings, the top relative contributor was an overweight stake in GE Vernova Inc. (NYSE:GEV). The company’s shares gained about 49% the past three months, as the power-generation business that split from General Electric on April 2 continued to fare well as a stand-alone entity. On July 24, the company reported quarterly earnings that were better than expected, boosted by its natural gas power-turbine business, and released an optimistic financial forecast for the rest of 2024.”
7. NVIDIA Corporation (NASDAQ:NVDA)
Coatue Management’s Stake Value: $1.34 billion
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) plans to spend hundreds of billions of dollars on chips as well as several other electronics made in the US. This is expected to happen over the next 4 years, with the company shifting its supply chain back from Asia, reported FT. NVIDIA Corporation (NASDAQ:NVDA)’s Chief Executive Jensen Huang told the FT that the latest chips which are designed by the company, and Nvidia-powered servers for data centers, could be now produced at the US-based factories. As per Huang, this happens to be a big step forward in supply chain resilience.
Elsewhere, UBS analyst Timothy Arcuri affirmed a “Buy” rating on NVIDIA Corporation (NASDAQ:NVDA)’s stock, with a price objective of $185.00. The analyst observed that sovereign AI, which means AI initiatives led by national governments, remains an overlooked factor that can fuel demand for AI infrastructure. Several countries continue to invest in the development of their own AI models as well as applications in a bid to avoid reliance on a few major foundation model developers, primarily located in the US. Overall, the analyst’s comments hint at the significant opportunity for NVIDIA Corporation (NASDAQ:NVDA), as the company remains well-positioned to address the expanding global demand for AI infrastructure fueled by sovereign AI initiatives.
Columbia Threadneedle Investments, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“NVIDIA Corporation (NASDAQ:NVDA) continued to outperform the market during the fourth quarter. The technology giant and top position in the fund delivered on sky-high expectations during the quarter and reported quarterly expectations that exceeded expectations. The red-hot company provided forward-looking expectations which were regarded as slightly lackluster as compared to prior quarters that smashed expectations. While the stock did churn a bit in the quarter, the AI giant remains top of mind for investors, especially as the company is on pace to satisfy the ‘staggering’ demand for its new product, Blackwell, which is poised to enter the market over the next year. The company’s position of owning all the major pieces of the evolving AI data center enables it to strengthen its competitive position and to define the technology roadmap for generations to come.”
6. Eaton Corporation plc (NYSE:ETN)
Coatue Management’s Stake Value: $1.47 billion
Number of Hedge Fund Holders: 88
Eaton Corporation plc (NYSE:ETN) operates as a power management company. Bank of America Securities analyst Andrew Obin reiterated the bullish stance on the company’s stock, offering a “Buy” rating on March 6. The analyst opines that the company’s capacity additions, mainly in North America, can fuel organic growth in the Electrical Americas segment. Eaton Corporation plc (NYSE:ETN) continues to strategically expand its capacity to address demand, which is backed by a healthy order book. The company’s prudent approach, together with the potential for margin improvement in critical markets such as utility and data centers, aids the anticipation of continued earnings growth.
By 2030, Eaton Corporation plc (NYSE:ETN) expects to deliver an organic revenue CAGR of between 6% to 9% and an adjusted EPS CAGR of more than 12%. While the company remains committed to delivering increased margins and solid free cash flow, its strong balance sheet allows financial flexibility to allocate capital in a disciplined and balanced way. Eaton Corporation plc (NYSE:ETN) remains well-positioned to capitalize on the global trend towards electrification. With companies and consumers pivoting towards electric solutions, the demand for sophisticated power management systems continues to increase rapidly. The company’s expertise in electrical systems, power distribution, and energy storage positions it well amidst the transition.
5. Constellation Energy Corporation (NASDAQ:CEG)
Coatue Management’s Stake Value: $1.48 billion
Number of Hedge Fund Holders: 85
Constellation Energy Corporation (NASDAQ:CEG) produces and sells energy products and services. The company’s strategic focus on carbon-free generation, mainly its robust position in nuclear energy, places it well for future growth. With increased global efforts towards combating climate change, the demand for clean energy sources is projected to increase. Constellation Energy Corporation (NASDAQ:CEG)’s extensive portfolio of nuclear and renewable assets enables it to meet the increased demand effectively. Also, the company’s ability to secure long-term contracts at premium prices demonstrates the emphasis placed on reliable, carbon-free energy.
Another growth opportunity for the company is the rapidly growing AI sector, which provides numerous opportunities for Constellation Energy Corporation (NASDAQ:CEG)’s expansion. The company has entered into a definitive agreement to acquire Calpine. This will couple the nation’s leading clean energy producer with the reliable, dispatchable natural gas assets of Calpine, resulting in opportunities to supply more customers coast-to-coast. The combination is expected to create the nation’s leading competitive retail electric supplier, offering 2.5 million customers with a broader array of customized energy and sustainability solutions and new product offerings in a bid to help them manage energy costs and achieve sustainability goals.
Fred Alger Management, an investment management company, released its Q4 2024 investor letter and mentioned Constellation Energy Corporation (NASDAQ:CEG). Here is what the fund said:
“Constellation Energy Corporation (NASDAQ:CEG) is the largest producer of clean energy in the U.S., with 32,400 Megawatts of capacity, approximately 67% of which is nuclear generated. Its nuclear, hydro, wind, and solar facilities provide 10% of all clean energy on the U.S. grid and 22% of its clean baseload power. We believe the company stands to benefit from the increasing electrification of the U.S. economy. The rise of electric vehicles, data centers, and reshoring of American manufacturing is driving U.S. electricity load growth for the first time in nearly two decades. During the quarter, shares detracted from performance due to a combination of regulatory challenges and broader industry pressures. The Federal Energy Regulatory Commission (FERC) rejected an interconnection agreement between Talen Energy’s Susquehanna nuclear plant and an Amazon data center, raising concerns about similar deals and regulatory hurdles for the nuclear industry. While this event was outside Constellation’s control, we believe it does not alter the thesis that tight power markets should drive higher pricing for the company. In our view, the FERC rejection also underscores anticipated tightness in mid-Atlantic power markets, reinforcing the long-term value of Constellation’s under-monetized assets.”
4. Microsoft Corporation (NASDAQ:MSFT)
Coatue Management’s Stake Value: $1.48 billion
Number of Hedge Fund Holders: 317
Tigress Financial analyst Ivan Feinseth upped the price target on Microsoft Corporation (NASDAQ:MSFT)’s stock to $595 from $550, keeping a “Buy” rating. Ongoing AI development and integration can fuel growth throughout all the key business lines, says the analyst. The research firm lauded Microsoft Corporation (NASDAQ:MSFT)’s strategic incorporation of ChatGPT and other AI functionalities in the products and services. The integration can enhance the company’s business performance and can also ramp up the ongoing digital transformation on a global scale. The firm believes that the deployment of AI throughout Microsoft Corporation (NASDAQ:MSFT)’s product lines, together with the sustained expansion of cloud infrastructure and increasing customer adoption of AI solutions, can contribute to accelerating business performance.
Microsoft Corporation (NASDAQ:MSFT)’s focus on integrating AI into business operations and product offerings can place it well as a critical player in the digital transformation landscape, which the research firm sees as a compelling investment opportunity. Elsewhere, Microsoft Corporation (NASDAQ:MSFT) received a “Sector Outperform” rating from Scotiabank, with a price objective of $470. The bank remains optimistic about the company’s investments in AI, mainly in its Azure and Microsoft 365 Copilot offerings, which can fuel healthy growth.
Mairs & Power, an investment advisor, released the Q4 2024 investor letter. Here is what the fund said:
“Unlike the dot-com companies that operated at the turn-of-the-century, many of today’s technology companies are established businesses with significant cash flows. We have argued, and continue to argue, that many of these investments are perfectly aligned with our investments process in that they embody durable competitive advantages, above-average growth prospects, and excellent management teams.
A perfect example is Microsoft Corporation (NASDAQ:MSFT), which has grown to become the largest holding in the Growth Fund. Microsoft has a near monopoly on the office software productivity market with its Microsoft Office Suite. The company’s Azure platform is a leader in cloud computing and has been steadily gaining share. Thanks to its Office and Azure products, the company is deeply embedded within many enterprise IT ecosystems. Therefore, it should be well-positioned to expand its presence within its customer base, as it rolls out premium-price AI solutions. The company is not resting on its laurels and plans on spending an astounding $80 billion in 2025 to build out AI data centers.”
3. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Coatue Management’s Stake Value: $1.96 billion
Number of Hedge Fund Holders: 186
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) announced the intention to expand its investment in advanced semiconductor manufacturing in the US by an additional $100 billion. The company’s total investment in the US is expected to reach US$165 billion. Through the expansion, it expects to create hundreds of billions of dollars in semiconductor value for AI and other cutting-edge applications. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s business in Q4 was aided by healthy demand for the industry-leading 3nm and 5nm technologies.
Notably, in Q4 2024, shipments of 3-nanometer made up 26% of total wafer revenue and 5-nanometer accounted for 34%. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 74% of total wafer revenue. In Q1 2025, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s business is expected to be impacted by smartphone seasonality, partially offset by continued growth in AI-related demand. Also, the ongoing AI boom demonstrates a healthy opportunity for the company’s long-term growth. AI applications need powerful and energy-efficient chips, which align perfectly with Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s advanced manufacturing capabilities.
Parnassus Investments, an investment management company, released the Q4 2024 investor letter. Here is what the fund said:
“Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSM) leading position in AI chip production continued to boost investor sentiment on the stock. During the year, moves by several large technology companies to increase their AI investments underscored demand for TSMC’s chips and supported the stock’s rise.”
2. Meta Platforms, Inc. (NASDAQ:META)
Coatue Management’s Stake Value: $2.15 billion
Number of Hedge Fund Holders: 262
Meta Platforms, Inc. (NASDAQ:META)’s investments in AI are poised to fuel significant revenue growth throughout its platforms. AI-driven advertising solutions can improve ad targeting, enhance user experience, and result in increased advertiser return on investment (ROI). Furthermore, the development of generative AI tools can create new possibilities for content creation and user engagement. These tools can result in more user time spent on Meta Platforms, Inc. (NASDAQ:META)’s platforms, resulting in significant opportunities for advertising and new revenue streams via AI-powered services.
Meta Platforms, Inc. (NASDAQ:META)’s new products and AI-driven services also provide strong monetization opportunities. The next growth opportunity is expected to be driven by Threads, its text-based conversation app. It can become a valuable advertising channel, mainly for brands that focus on engaging in real-time conversations with consumers. AI-driven services can establish new revenue streams in the broader enterprise market. Such services can span from AI-powered customer service solutions to advanced analytics tools for businesses.
Hardman Johnston Global Advisors, an investment management company, released a Q3 2024 investor letter. Here is what the fund said:
“During the quarter, we initiated one new position in Meta Platforms, Inc. (NASDAQ:META) and had no liquidations. Management at Meta has effectively addressed concerns about investment efficiency by shifting resources from Reality Labs towards broader AI initiatives with a clearer path to profitability. We believe management has successfully articulated the benefits of this strategy, highlighting how AI is driving user engagement and advertiser productivity. This, in turn, fuels continued revenue momentum and increases the likelihood of positive earnings surprises in the future. Additionally, the parent company of the social media platform, Facebook, has recently taken positive steps to enhance safety, which suggests to us a shift towards a more proactive and responsive approach to addressing important potential challenges and concerns. Weak oversight over data privacy protection was a key reason why we sold the position in the portfolio back in 2021. Removing this governance overhang allows us to feel comfortable to enter back into the stock at a time when we believe it is poised for strong earnings growth going forward.”
1. 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.”
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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