Billionaire investor Chase Coleman is no stranger to audacious investments. With a track record of early stakes in LinkedIn, Facebook (now Meta Platforms), and Spotify, Coleman’s knack for identifying winners has firmly established him as one of today’s pre-eminent investors.
Coleman, who founded Tiger Global Management at the young age of 24 with $25 million from legendary hedge fund manager Julian Robertson, Jr., has since expanded his firm to manage approximately $58 billion in assets, earning him the 500th spot on Forbes’ list of the world’s richest individuals, with an estimated net worth of $5.7 billion.
To close out 2023, Coleman defied convention, allocating a staggering 45.8% of Tiger Global Management’s equity portfolio to just five artificial intelligence (AI) stocks, underscoring his bullish outlook on the sector.
Let’s dissect and deep-dive into Coleman’s top holdings to see why he’s betting heavily on these AI stocks.
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1. Meta Platforms
Formerly known as Facebook, Meta Platforms is Coleman’s largest holding. The company’s adept use of sophisticated AI algorithms for digital advertising has been a key revenue driver. As the recovery in ad spending gained momentum, Meta’s AI-powered tools contributed to its stellar performance in 2023. Further, the development of a top-tier AI model, the LLaMA (large language model Meta AI), has introduced a new revenue stream. Meanwhile, the company ventured into uncharted territory by announcing its inaugural dividend. With Meta’s stock trading at about 23 times forward earnings, an attractive valuation compared to the broader market, Coleman’s confidence in the company is palpable.
2. Microsoft
Microsoft’s $13 billion investment in OpenAI raised eyebrows, shining a spotlight on the potential applications for generative AI. Leveraging AI across its suite of productivity tools, Microsoft bolstered demand by offering sought-after AI models on its Azure Cloud. The proliferation of AI-fueled assistants such as Microsoft Copilot represents a significant growth opportunity. With Azure’s expansion outpacing the competition, and 6 percentage points of that growth attributed to heightened AI services demand, Microsoft, though trading at a slight premium to the overall market, presents a compelling investment case. The company’s strong growth history and AI potential further cement its status as a must-own AI stock, appealing to Coleman.
3. Amazon
Amazon’s extensive use of AI algorithms in its e-commerce operations, coupled with its foray into generative AI applications, have been pivotal. Additionally, as a leading cloud infrastructure provider, Amazon Web Services (AWS) offers a comprehensive suite of popular generative AI models via Bedrock AI. Its continuous development of AI processors and a modest valuation of just 2 times forward sales undoubtedly piqued Coleman’s interest.
4. Alphabet
Similar to Meta Platforms, Alphabet, the parent company of Google, relies heavily on AI to enhance its ad tech business. The resurgence in the digital advertising market is poised to amplify its fortunes, facilitated by its commitment to developing generative AI solutions. The recent launch of Gemini AI and the attractive valuation – trading at just 25 times earnings – likely made Alphabet an irresistible bet for Coleman.
5. Nvidia
Nvidia’s groundbreaking processors have redefined the AI landscape, making the company a dominant force in machine learning and data centers. With its GPUs capturing an estimated 95% share in both markets, Nvidia stands as the epitome of AI adoption. Despite its astronomical gains, Nvidia’s remarkably low PEG ratio and significant investment in research and development position it as an undervalued stock, appealing to Coleman’s investment strategy.
Chase Coleman’s resolute dedication to these AI stocks underscores his confidence in the sector’s potential. His bold moves spotlight the transformative power of AI and affirm the compelling investment narrative surrounding these companies.
