We recently published a list of Billionaire Stanley Druckenmiller is Buying and Selling These 10 AI Stocks. Since Coherent Corp (NYSE:COHR) ranks 9th on the list, it deserves a deeper look.
Stanley Druckenmiller is one of the few billionaires who have been bullish on the AI megatrends right from the start. But that doesn’t mean he’d buy just anything AI the market is buying. After making huge profits from his bullish bet on Jensen Huang’s AI chips empire, he started cashing out of the company in the first quarter and by the end of the June quarter, his stake in the company was left at just over 200,000 shares.
Back in May, Druckenmiller explained why he’s selling the hottest AI stock, saying he’s had a “hell of a run” and he now “just needs a break.”
However, the billionaire said at the time that AI remains underhyped in the long term. Stanley Druckenmiller compared the internet revolution with the current AI boom, saying AI could “rhythm” with the internet and the real payoffs will come 4-5 years from now on. The Duquesne Capital founder, who closed his fund for outside investors and turned it into a family officer in 2011, said that the “incremental payoff” of AI investments is coming by the “day.”
During the second quarter, Druckenmiller shook up his portfolio to buy and sell several famous as well as under-the-radar AI stocks. In this article, we will take a look at some of those.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Coherent Corp (NYSE:COHR)
Billionaire Stanley Druckenmiller’s Stake Value: $260,098,000 (+43% From the First Quarter)
Coherent Corp (NYSE:COHR) is trending as investors pay attention to this relatively new entrant in the list of popular AI semiconductor stocks. The company recently posted strong quarterly results and gave an upbeat guidance. Earlier this month, BofA upgraded the stock to Buy from Neutral citing potential for improved execution and AI optical market growth. BofA also increased its price target for the stock to $75 from $65.
Coherent Corp (NYSE:COHR) makes optical materials and semiconductors. Its laser tech is used for laser welding for EV batteries and for UV lasers in mobile and high-end TV display industries. However, the spotlight is currently on its Communications segment, which is set to benefit from the expansion of cloud computing, AI, and machine learning. This segment, driven by the demand for datacom transceivers that handle higher data throughput, accounted for 52% of Coherent Corp (NYSE:COHR) recent market and grew by double digits year-over-year, particularly in North America and China.
Giverny Capital Asset Management stated the following regarding Coherent Corp. (NYSE:COHR) in its Q2 2024 investor letter:
“Because I like the portfolio, we had very few transactions during the quarter. I exited Coherent Corp. (NYSE:COHR) as I came to believe the company has an exceptional collection of assets but a much less impressive management culture. The CEO and CFO of Coherent both left their jobs recently, and perhaps I should have given their replacements time to set a new course. I used the proceeds from the sale to add to Five Below and Kinsale Capital. In the short run, Coherent is up and Five Below is down, so the early returns on this swap are not encouraging.”
Overall, Coherent Corp. (NYSE:COHR) ranks 9th on Insider Monkey’s list titled Billionaire Stanley Druckenmiller is Buying and Selling These 10 AI Stocks. While we acknowledge the potential of Coherent Corp. (NYSE:COHR), our conviction lies in the belief that under the radar 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 COHR 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.