Tag: Artificial

As founder of Coatue Management, Philippe Laffont oversees $26.9 billion invested in more than 80 stocks, and though he buys players across many sectors, one in particular stands out. The billionaire is known for his investments in innovative companies, and he’s generally found them in the area of technology. The sector consistently represented more than 40% of his holdings over the past five quarters, and four of his five most heavily weighted stocks — led by Meta Platforms and Amazon — are giants in the tech field.

But in the third quarter, Laffont and his team cut their positions in two of the world’s most-watched tech stocks right now and increased positions in two stocks in a completely different high-growth area that’s generating billions of dollars these days. Laffont reduced artificial intelligence (AI) chip giants Nvidia (NVDA -3.67%) and Advanced Micro Devices (AMD -2.45%), companies that have been growing data center sales in the triple digits, and increased investment in two companies dominating a market that may reach beyond $100 billion later this decade. Let’s find out more.

Image source: Getty Images.

Laffont’s Nvidia and AMD holdings

So, first let’s talk about Laffont’s Nvidia and AMD holdings. He hasn’t exactly dropped them like a hot potato and still clearly believes in these companies’ futures. Nvidia is the leading AI chip designer, with more than 70% market share, and offers customers an entire portfolio of related products and services. This has helped the company generate record revenue in recent times — and the stock has followed, climbing 171% last year.

AMD may be a far-behind rival to Nvidia in the AI chip market, with about 11% share, but the company still has delivered significant growth thanks to demand from AI customers. In the recent quarter, AMD reported a 122% increase in data center revenue to $3.5 billion and said it’s on track to report record full-year revenue.

Laffont reduced his position in Nvidia by 26% in the quarter and now owns 10,138,161 shares, and he cut his AMD holding by 32% to 4,249,190 shares. So, Laffont is still betting on gains in these stocks, but he’s also turning to another area to benefit from innovation.

In the quarter, Laffont boosted his holdings of Eli Lilly (LLY -1.48%) and Novo Nordisk (NVO -1.04%), two companies that are dominating the weight loss drug market. Analysts expect this market to reach $100 billion to $130 billion by 2030, so this could represent significant opportunity for these drugmakers and those who invest in them.

Looking for innovation beyond the tech industry

Laffont increased his position in Lilly by more than 19% and now holds 247,950 shares, and he lifted his position in Novo Nordisk by more than 800% and now owns 326,363 shares. Of course, these pharma players still represent a much smaller portion of Laffont’s portfolio than AI stocks, but his move shows he’s on the lookout for innovation and growth opportunities — and can find them — well beyond the tech industry.

Lilly and Novo Nordisk both have demonstrated they could be the right stocks to add growth to a portfolio now and into the coming years. Lilly is the seller of Mounjaro and Zepbound, while Novo Nordisk sells Ozempic and Wegovy — names many of us have heard in the news due to high demand for these products. They act on hormone pathways involved in the management of blood sugar levels and appetite, and as a result, they’ve delivered great results to patients aiming to lose weight. (Mounjaro and Ozempic are approved for type 2 diabetes, but doctors have prescribed them off-label for weight loss. Zepbound and Wegovy are specifically approved for weight control.)

These drugs have generated blockbuster revenue, and considering the level of demand and forecasts for market growth, this is likely to continue. On top of this, Lilly recently won approval for Zepbound in another indication — sleep apnea — opening the door to Medicare coverage. And Medicare covers Wegovy as a treatment to reduce heart attack or stroke risk. This is important because it increases the number of patients who can afford these drugs. (Medicare won’t reimburse drugs approved for weight loss alone.)

All of this means buying shares of these two big pharma players right now may have been a genius move by Laffont — and other investors looking for growth might want to do the same.