Billionaire Philippe Laffont Disposes Of Nvidia Shares and Acquires Artificial Intelligence Stock Projected to Surge 300% by 2025
In a notable move, Philippe Laffont, the renowned investor at Coatue Management, has decided to significantly reduce his firm's stake in Nvidia (NVDA) and invest heavily in the emerging AI infrastructure provider, CoreWeave (CRWV).
Laffont's decision to move away from hardware monopolies like Nvidia, which dominates the market with its GPU chips, and towards companies that build scalable, GPU-powered ecosystems reflects a strategic shift. CoreWeave, with its cloud infrastructure services, is better positioned to capitalise on the growing demand for AI computing capacity without being directly tied to hardware sales[1].
The reasons behind this shift are multifaceted. Laffont is reevaluating the valuation and risk associated with Nvidia's business model. Nvidia's accelerated innovation cycle and dominance in the GPU market could lead to significant competition and potential disruptions as hyperscalers like Microsoft and Amazon invest in their own AI-specific chips[2][3].
Moreover, CoreWeave, being a newer player in the AI infrastructure space, offers higher growth potential compared to Nvidia, which is already a well-established leader. CoreWeave's business model of leasing data center space and upgrading hardware regularly may provide more consistent profitability and adaptability in a rapidly evolving AI landscape[2].
CoreWeave's strategic partnership with Nvidia positions it as a key player in distributing Nvidia's technology while maintaining its own growth trajectory. This strategic partnership allows CoreWeave to leverage Nvidia's innovations without being directly tied to its hardware sales cycles[2][3].
Investors should, however, be cautious about CoreWeave's high valuation and may want to wait for a lower price before building a large position. Despite this, CoreWeave's revenue backlog increased 63% to $26 billion in the first quarter, in part due to a new deal with OpenAI[4].
Meanwhile, Nvidia reported strong first-quarter financial results, with sales rising 69% to $44 billion. Nvidia's CEO, Jensen Huang, attributed the strong demand to "incredibly strong" demand for AI infrastructure solutions[5]. Nvidia's non-GAAP earnings increased 33% to $0.81 per diluted share in the first quarter, and the company's current valuation is 49 times adjusted earnings[6].
Interestingly, Philippe Laffont bought CoreWeave for about $40 per share in the first quarter, when it was only public for two trading days[7]. CoreWeave's share price has quadrupled since its IPO, and the stock now trades at 29 times sales[8].
Despite the shift, Laffont still held Nvidia as his eighth-largest holding at 4% of his portfolio as of March 31[9]. Grand View Research estimates spending on AI hardware, software, and services will increase at 35% annually through 2030[10]. Only three companies in the S&P 500 currently have price-to-sales ratios above 29[11].
Nvidia continues to lead the market in data center graphics processing units (GPUs)[12], and Wall Street expects Nvidia's adjusted earnings to grow at 40% annually through the fiscal year ending in January 2027[13]. Nvidia has booming networking and cloud services businesses built on growing demand for AI[14].
In conclusion, while Philippe Laffont's decision to invest heavily in CoreWeave signals a strategic shift away from Nvidia, both companies remain significant players in the AI landscape. Investors should carefully consider the growth potential, valuation, and risks associated with both companies as they navigate this rapidly evolving sector.
Finance and money are key factors influencing Laffont's decision to invest in CoreWeave, a technology-driven AI infrastructure provider. He is reconsidering the valuation and risk of Nvidia, a well-established leader in the AI market, due to its accelerated innovation cycle and potential competition from hyperscalers investing in AI-specific chips. While CoreWeave offers higher growth potential, it also has a high valuation, and investors may want to wait for a lower price before building a large position. Despite reducing his firm's stake in Nvidia, Laffont still considers it a significant player in the AI landscape.
