Billionaire Philippe Laffont Sold 80% of Coatue's Stake in Nvidia and Is Piling Into This Historically Cheap Artificial Intelligence (AI) Stock Instead

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In case you missed it, one of the most important data releases of the fourth quarter occurred last week -- and I'm not talking about the October inflation report.

No later than 45 calendar days following the end to a quarter, institutional investors with at least $100 million in assets under management (AUM) are required to file Form 13F with the Securities and Exchange Commission. This formal-sounding filing allows investors to see which stocks Wall Street's smartest and most historically successful money managers purchased and sold in the latest quarter (in this instance, the September-ended quarter).

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Even though 13Fs aren't perfect -- since they're filed up to 45 days after a quarter ends, their snapshot can be stale for active hedge funds -- they can still provide invaluable insight on which stocks, industries, sectors, and trends are piquing the interest of top-tier investors. This includes gauging sentiment on Wall Street's hottest innovation, artificial intelligence (AI).

A stock chart displayed on a computer monitor being reflected on the eyeglasses of a money manager.
Image source: Getty Images.

Although Berkshire Hathaway's Warren Buffett commands a lot of attention, he's not the only successful billionaire money manager that investors closely track. Coatue Management's Philippe Laffont also has a phenomenal investing track record. Laffont's fund, which primarily invests in tech stocks and innovation-driven businesses, closed out the third quarter with $26.9 billion in AUM spread across 81 companies.

However, the real jaw-dropper for Laffont has been his trading activity among AI stocks. He continues to dump shares of Wall Street's AI darling, Nvidia (NASDAQ: NVDA), and is now piling into a historically cheap AI stock.

Laffont's Coatue has sent 80% of its Nvidia shares packing

Taking into account the historic 10-for-1 stock split Nvidia effected following the close of trading on June 7, Coatue Management held 49,802,020 shares on March 31, 2023. Over the last 18 months, Laffont and his team have shown a collective 39,663,859 shares of the world's largest publicly traded company to the door, thereby reducing Coatue's stake by 80%!

In many ways, Nvidia's ascent has been the blueprint for future innovators to follow. Its graphics processing units (GPUs) hold a monopoly like share in enterprise data centers, and orders for its H100 GPU (commonly known as the "Hopper") and successor Blackwell chip are backlogged. When demand for a product outstrips supply, it's normal for its price to head higher. Nvidia has been able to net $30,000 to $40,000 for its Hopper chip, which ranges from a 100% to 300% premium over competing chips.