Philippe Laffont Adjusts Investments: From AI Chips to Weight Loss Breakthroughs

Founder of Coatue Management, Philippe Laffont, manages a hefty $26.9 billion across over 80 stocks. While he typically invests in various sectors, technology is a primary focus, making up more than 40% of his holdings for the last five quarters. Notably, four of his top five investments – led by Meta Platforms and Amazon – are major players in tech.

However, in the third quarter, Laffont took a different approach. He reduced his stake in two well-followed tech stocks and instead increased his investments in a burgeoning market that has the potential to generate billions of dollars. Laffont decreased his positions in Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD), notable companies previously experiencing explosive growth in data center sales, and shifted some of his capital towards two companies leading the weight loss drug market, which analysts predict could surpass $100 billion by 2030.

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Analyzing Laffont’s Nvidia and AMD Investments

First, let’s examine Laffont’s investments in Nvidia and AMD. He hasn’t abandoned these stocks entirely; he still maintains faith in their potential. Nvidia, the foremost AI chip designer, boasts a market share of over 70% and offers a wide range of products and services. This position has propelled Nvidia to record revenue recently, as its stock soared by 171% last year.

Although AMD trails Nvidia in the AI chip arena with only around 11% market share, it has still seen considerable growth due to rising demand from AI sectors. In the last quarter, AMD reported a staggering 122% growth in data center revenue, reaching $3.5 billion, and forecasts indicate it’s on the path to achieving record full-year earnings.

In this recent quarter, Laffont trimmed his Nvidia stake by 26%, now holding 10,138,161 shares, while he reduced his AMD shares by 32% to 4,249,190 shares. While signaling a cautious approach, Laffont continues to bet on the growth potential of these tech shares.

Diving Into the Weight Loss Drug Market

During the same period, Laffont ramped up his investments in Eli Lilly (NYSE: LLY) and Novo Nordisk (NYSE: NVO), both of which are leaders in the weight loss drug market. With estimates suggesting this market could soar to $100 billion to $130 billion by 2030, opportunities for these companies and their investors are expanding.

Laffont increased his shares in Lilly by over 19%, bringing his total to 247,950 shares, and he sharply raised his Novo Nordisk holdings by more than 800%, now totaling 326,363 shares. Though these pharmaceutical stocks are a smaller fraction of his portfolio compared to AI stocks, this strategy signals his keen eye for innovative and profitable opportunities beyond technology.

Both Lilly and Novo Nordisk have produced popular drugs – Mounjaro and Zepbound from Lilly, alongside Ozempic and Wegovy from Novo Nordisk. These medications have gained considerable media attention due to their effectiveness in managing blood sugar levels and appetite, making a significant impact in the weight-loss community. Notably, Mounjaro and Ozempic are prescribed for type 2 diabetes, but are sometimes used off-label for weight loss, while Zepbound and Wegovy have specific approvals for weight management.

These products have generated soaring revenues, and forecasts suggest this trend will continue. Recently, Lilly garnered approval for Zepbound to treat sleep apnea, potentially leading to Medicare coverage, which could significantly increase patient access to these treatments, as Medicare typically does not reimburse drugs solely designed for weight loss.

Investing in these two pharmaceutical companies might turn out to be a strategic decision for Laffont. Other investors seeking growth opportunities may wish to consider taking similar actions.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Meta Platforms, and Nvidia. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.