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 Salesforce, Inc. (NYSE:CRM) 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 service team in an office setting using the company’s Customer 360 platform to communicate with customers.
Salesforce, Inc. (NYSE:CRM)
Morgan Stanley analyst Keith Weiss believes that Salesforce’s PEG ratio of 1.2 indicates that the market has yet to price in operational discipline and earnings growth sustainability and has therefore given it an Overweight with a $320 price target. Similarly, an analyst at Mizuho Securities Gregg Moskowitz states that the company still is well positioned to help customers in digital transformation but needs to prioritize profitable growth. The analyst reiterated his Buy rating on the stock with a price target of $300.
According to Insider Monkey, Fisher Asset Management is a prominent investor in Salesforce, Inc. (NYSE:CRM) holding 10.8 million shares valued at around $3 billion and Coatue Management holds 4.7 million shares worth $1.4 billion.
Harding Loevner Global Equity Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its first quarter 2024 investor letter:
“Leading software companies have the advantage of high switching costs and the ability to incorporate new features into products customers already use. For example, Microsoft has added its Copilot chatbot functionality to everything from search (Bing Chat, recently renamed to just Copilot) to coding (GitHub Copilot) and workplace applications (Copilot for Microsoft 365). Software sold by Microsoft and other companies such as Salesforce, Inc. (NYSE:CRM), SAP, and ServiceNow are also already deeply integrated into their customers’ operations and workflow.
As large enterprises search for the right balance, Salesforce’s Data Cloud, a flagship offering, is designed to address a critical issue for them so they can make better use of AI tools. After a hectic buildout over the last few years of “data warehouses” and “data lakes”—two types of repositories for storing and processing data—across the various business units of large companies, many companies are left with what feels like islands of trapped data. Data Cloud solves this by creating a single platform to access and leverage all of an enterprise’s data, eliminating the need to constantly duplicate large amounts of information across different platforms. Users are then able to apply generative-AI technology, such as Salesforce’s Einstein tool, to a more comprehensive dataset, which enables them to better glean customers’ intentions, personalize marketing messages, and automate the processing of customer-service requests. As users build these systems, Einstein’s copiloting functionality helps their programmers work more efficiently so that IT departments with limited budgets and manpower can still develop the necessary tools. Salesforce’s management projects that revenue and earnings will climb about 9% and 45%, respectively, in fiscal 2025, citing the company’s operating leverage and cost discipline. We think these figures are achievable given the renewed focus on profitable growth, and so we added to the stock during the quarter.”
Overall CRM ranks 4th 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 CRM 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 CRM 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.