Artificial Intelligence Boosts the Market: Philippe Laffont Bets on 5 Leading AI Stocks

The rapid advancements in artificial intelligence (AI) have significantly driven the current market boom. Companies are converging to harness the extensive productivity increases offered by AI. From generating texts and images to automating time-consuming tasks— the possibilities seem endless. Philippe Laffont, a billionaire investor and founder of Coatue Management, one of the leading technology-oriented hedge funds globally, is convinced of AI's future. Since its founding in 1999 with $50 million in startup capital, Coatue Management has built a fortune of $58 billion under management, vastly outperforming the broad market. With an annual return of 14% over the past three years, Coatue has outpaced the S&P 500, which achieved 8% in the same period. Laffont sees tremendous potential in AI investments in the coming years and has acted accordingly: five leading AI stocks currently constitute the largest positions in Coatue’s portfolio. Meta Platforms is Coatue’s largest AI investment, holding an 8.2% share. The company efficiently utilizes AI to provide relevant content on its social media platforms and to recognize and tag people in photos. The recent profit increase, despite a slight reduction in position, confirms the confidence in the stock. Amazon remains the second-largest position with an 8.1% share. The e-commerce giant uses AI to provide purchase recommendations and plan deliveries efficiently. Additionally, Amazon Web Services stands out with the introduction of Bedrock AI and specialized AI chips. Taiwan Semiconductor Manufacturing (TSMC), is the third-largest position with 7.7%. TSMC, which produces 92% of the world's most advanced chips, benefits greatly from the increasing demand for AI processors. A multiple of 25 times future earnings indicates a fair valuation. Nvidia, a pioneer in the AI revolution, holds the fourth position with 6.6%. Despite a slight reduction in the position last quarter, the value of the position increased thanks to a 37% stock gain. Nvidia continues to dominate the AI processor market with a 90% market share. Finally, Microsoft ranks fifth with a 6.4% share. Particularly impressive is the introduction of Copilot, an AI-powered productivity suite. This has not only raised expectations for future revenue but also supported the growth of Azure Cloud. These five stocks vividly demonstrate their leadership in their respective industries and have significantly outperformed the S&P 500 since the onset of the AI revolution. However, consider that even these stars are not on every expert’s list. A prudent investor carefully considers all options.