We recently compiled a list of Billionaire Phillipe Laffont’s Top 10 “Mostly AI” Stock Picks. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against Philippe Laffont’s other stock picks.
Billionaire Philippe Laffont is a Founder & Portfolio Manager at Coatue Management, L.L.C. His fund’s top 10 holdings comprise of mostly tech stocks which depicts his love for technology. His thirst for technology was such that after graduating from MIT with a computer science degree he applied for a job at Apple multiple times but was rejected every time. This pushed him towards another calling, which was to manage a hedge fund and its holdings.
Philippe Laffont’s journey towards investing started when he moved to Spain where he started working at McKinsey. It was at this time when he learned about the “boom of the PC” and about the three pioneers of PC industry namely IBM, Dell and Microsoft. He decided to invest in these stocks which churned out more money than he was earning at that time. This led to his endeavors as an investor. In order to learn more about being an investor he got a chance to work at a mutual fund without pay where he learned about different terminologies related to the industry to “get his foot in the door”.
After his employment ended in Julian Robertson’s organization, he moved on to gather funds to start investing from his friends and family but most of his funds came from professional brokers and people who admired his entrepreneurial spirit. This led to the launch of his company on January 1, 2000, with $50 million at its disposal and the fund’s AUM now stands at $50 billion. His investment philosophy is to provide longevity and good returns for the investors; and to have investors that would bet on him for the long term. Philippe Laffont’s philosophy of helping out people is visible in his efforts to advise people on investing and he believes in helping any new tech “kid” that could become the next Tiktok.
In his interview at the Bloomberg Invest Philippe Laffont said that he is conflicted about whether small or big companies will be the AI winners. According to him the history of technology indicates that the big gets bigger but new companies have also made it through like Facebook or TikTok. He thinks that AI isn’t overhyped and the valuations aren’t out of whack right now. Here is what he said:
“It’s true that the mentions of AI in every TV and and written form is very high. And so one could say, Wow, if everybody talks about it, it must be priced in. And the only reason why more positive is I remember when I invested in Apple in 2009 when the iPhone first came out and for years people told me, Why are you invested in Apple? Everybody talks about Apple. And obviously it had an incredible run. So I actually think that sometimes because someone speaks a lot about something, it might be actually a good sign versus an overhyped sign.”
Philippe Laffont thinks the next phase of AI will be real estate with data centers and especially utilities with power. Another phase of AI, according to Philippe Laffont would be robots with artificial brains called humanoids. The technology hedge fund manager also made the following prediction which has a huge implication for the semiconductor stocks:
“I’ve made a lot of mistakes, You know, betting on these new technologies like AR/VR turns out to be not so big. 3D printing turns out to be not so big. My estimate is $100 trillion was invested in today’s dollar in the PC, CPU based infrastructure. All this is going to get ripped out to put $100 trillion or more in our GPU based infrastructure.”
Our Methodology
Stocks mentioned in this article were picked from the investment portfolio of Coatue Management at the end of the first quarter of 2024. In order to provide readers with a more comprehensive overview of the companies, the analyst ratings for each firm are mentioned alongside other details. A database of around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2024 was used to quantify the popularity of each stock in the hedge fund universe.
A customer entering an internet retail store, illustrating the convenience of online shopping.
Amazon.com, Inc. (NASDAQ:AMZN)
Amazon.com, Inc (NASDAQ:AMZN) witnessed an increase of 12.5% YoY in the first quarter revenue whereas its adjusted EPS more than tripled. In addition to AWS business generating operating margins above 37% in the first quarter, digital ads also contributed to Amazon.com, Inc’s (NASDAQ:AMZN) revenue as the segment reported an increase of 24% YoY to $11.8 billion in the first quarter. Revenue in North America and International segments grew as well.
The largest shareholder in Amazon.com, Inc. (NASDAQ:AMZN), according to Insider Monkey’s database of hedge funds, is Fisher Asset Management that holds 42 million shares worth over $7 billion while Coatue Management holds 10 million shares worth $1.8 billion.
Baron Fifth Avenue Growth Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its first quarter 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest retailer and cloud services provider. Shares increased 18.7% on quarterly results that exceeded consensus expectations, with revenue growth of 13% year-over-year and operating margins of 7.8% (up from 1.8% a year ago). We believe that Amazon is well positioned in the short to medium term to continue improving its core North American margins, which have reached 6.1% in the fourth quarter, the seventh straight quarter of margin improvement and an overall improvement of 800bps. Amazon has been rearchitecting its fulfillment network, improving efficiency, reducing cost-to-serve and accelerating delivery speeds thanks to initiatives such as regionalization, with the number of items delivered during the same day or overnight increasing by nearly 70% year-over-year. Reducing the cost to serve also enables Amazon to sell lower priced items and expand its addressable market to everyday purchases. Additionally, Amazon continues to benefit from its fast-growing, margin-accretive advertising business winning market share in digital advertising thanks to its structural advantages of a closed loop system, which enables a deterministic calculation of Return on Ad Spending. We also believe that e-commerce still has long duration growth ahead as it still accounts for less than 15% of retail. Similarly, Amazon’s cloud service, AWS, remains relatively early in its S-curve with cloud representing around 13% of worldwide IT spending13 incremental tailwinds across the three layers of the GenAI stack – infrastructure with NVIDIA’s own AI chips (Trainium and Inferentia) as well as with its offering of NVIDIA chips, platform (Bedrock), and applications (first and third party).”
Overall AMZN ranks 2nd on our list of billionaire Phillipe Laffont’s top stock picks. You can visit Billionaire Phillipe Laffont’s Top 10 “Mostly AI” Stock Picks to see the other stocks that are on hedge funds’ radar. While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an 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.
