After making a huge profit in CoreWeave, Laffont sees an opportunity in an AI leader.
Billionaire Philippe Laffont has his finger on the pulse of big tech trends like artificial intelligence (AI). That’s led him to make some stellar investments over the past few years, producing market-beating returns as AI has fueled the current bull market.
One of Laffont’s most successful investments in his hedge fund, Coatue Management, in 2025 was CoreWeave (CRWV +10.01%). The cloud computing business became the fund’s largest marketable equity holding by the end of the second quarter as a result of a big purchase at the start of the year and a huge run-up in price.
But Laffont knows when to take profits, and he did exactly that last quarter. His timing couldn’t have been better. Not only has CoreWeave seen its shares slide since Coatue sold the majority of its shares, but the stock Laffont bought instead has climbed considerably higher over the last three months. Is it too late for readers to follow Laffont’s lead, or is the shift in fortunes just getting started?
Image source: Getty Images.
The rise and fall of CoreWeave
CoreWeave was the beneficiary of Nvidia‘s (NVDA +2.01%) decision to diversify its customer base beyond the big tech companies. Nvidia invested in the small cloud provider and then started offering CoreWeave early allotments of graphics processing units (GPUs) ahead of the hyperscale customers.
That relationship got another boost in September, when Nvidia agreed to buy any excess AI capacity from CoreWeave in a $6.3 billion deal. That, in turn, gave CoreWeave greater license to build new data centers faster.
CoreWeave’s business model relies on a flywheel. It takes on debt and uses it to build data centers, then rents the data centers to customers with long-term contracts. It uses those long-term contracts as collateral to secure new loans and build additional data centers.
However, CoreWeave announced the flywheel might not be spinning as fast as originally thought. Alongside its third-quarter earnings report, the company said one of its data center providers experienced supply-chain delays, leading to a drop in its fourth-quarter revenue guidance.
Today’s Change
(10.01%) $7.94
Current Price
$87.30
Key Data Points
Market Cap
$40B
Day’s Range
$77.88 – $87.56
52wk Range
$33.52 – $187.00
Volume
649K
Avg Vol
30M
Gross Margin
49.23%
Dividend Yield
N/A
The news sent the stock dropping, as fears around a potential AI bubble grew. The shortfall exposed the risks involved in investing in CoreWeave and similar neocloud companies, which use growing amounts of debt, based on speculative spending from a handful of AI companies. Shares dropped more than 50% from the stock’s October highs.
Laffont certainly got lucky with his timing, but it was plain to see CoreWeave shares were expensive as they climbed higher over the summer. The company’s enterprise-value-to-sales multiple climbed above 30.
Even after the sell-off, CoreWeave remains relatively expensive, with its EV more than 12 times its trailing-12-month sales. That said, the stock traded for a similar multiple at the start of the year when Laffont made his big bet on CoreWeave.
Still, the Coatue team may have found an even better investment opportunity, and it’s already paid off handsomely.
Laffont changed his mind on this AI stock
Earlier this year, Coatue published a list of the 40 biggest investment opportunities in tech, the Fantastic 40. There was one glaring omission from the list: Alphabet (GOOG 0.83%) (GOOGL 0.76%). The investment teams’ reasoning was that AI chatbots like OpenAI’s ChatGPT were eating into Google’s usage, slowly killing Alphabet’s cash cow.
However, Laffont and company changed their tune in an October update, including Alphabet in the Fantastic 40. And its November 13F filing with the SEC showed the hedge fund was putting its money where its mouth was. It bought over 7 million shares of Alphabet’s Class A and Class C shares combined. After the stock’s strong performance since Coatue’s purchase, the two share classes now combine to form the hedge fund’s largest marketable equity position.
Today’s Change
(-0.83%) $-2.67
Current Price
$317.95
Key Data Points
Market Cap
$3869B
Day’s Range
$315.59 – $323.07
52wk Range
$142.66 – $328.67
Volume
535K
Avg Vol
24M
Gross Margin
59.18%
Dividend Yield
0.26%
Alphabet’s gains have been fueled by both internal and external factors. Externally, Alphabet received a favorable ruling in its antitrust case, which is expected to have minimal impact on its operations going forward. Internally, the company has shown several positive developments in its AI-related businesses.
Its cloud computing division saw strong revenue growth and even better growth in its backlog last quarter. Its custom AI accelerator attracted the business of Anthropic and reportedly has Meta Platforms interested in using it, as well. And its Gemini 3 release was met with positive reactions as it continues to show progress in winning users from OpenAI and others.
Importantly, the financial results have been spectacular, and Alphabet has shown no signs of a slowdown for Google’s ad sales, the cash cow that fuels the growth of its AI business. Search revenue climbed 15% year over year last quarter, accelerating from 10% growth in the first quarter and 12% growth in the second quarter.
As the stock price has climbed higher, shares have seen their earnings multiple expand from around 20 times expectations to nearly 29 times forward earnings estimates. While it’s certainly no longer a bargain, that’s a fair price to pay for the company, which is showing tremendous progress in AI on multiple fronts while growing its core business at an accelerating pace.