High Stakes Moves: Coatue Management’s Shift from AI Stocks to Chipotle
November was a busy month for financial news, with Election Day followed by earnings season, when many major public companies report their quarterly results. Amid this flurry, significant filings could easily have been overlooked.
One key event was November 14, the deadline for institutional investors managing over $100 million in assets to file Form 13F with the Securities and Exchange Commission. This form allows investors to see which shares were bought and sold by top money managers in the last quarter.

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Warren Buffett of Berkshire Hathaway has seen a staggering return of over 5,800,000% on Class A shares (BRK.A) since he took the helm in the 1960s. His every move is scrutinized by investors, but he’s not alone. Billionaire Philippe Laffont, founder of Coatue Management, is also a notable figure in investing. Since starting his firm in 1999, Laffont has established a focus on high-growth tech businesses and currently oversees close to $27 billion in assets.
Coatue operates with a concentrated strategy, maintaining only 81 positions in its portfolio. Recently, Laffont made headlines by offloading shares in two leading AI companies and significantly increasing their stake in a top-performing stock-split company.
Coatue Cuts Back on Nvidia and AMD Shares
The surge in artificial intelligence (AI) has captivated Wall Street over the last two years. Analysts from PwC estimate that AI could contribute $15.7 trillion to the global economy by 2030, creating numerous investment opportunities.
Despite the AI hype, Laffont and his team have been selling shares of two top AI stocks: Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD).
Selling Nvidia’s shares has resulted in a massive 80% reduction, with Coatue offloading 39,663,859 shares since March 2023. For AMD, the firm has sold 4,249,190 shares, marking a 50% cut to their position over the same period.
Profit-taking might explain some of this selling, but historical trends also play a role. Major technology revolutions often trigger early-stage bubbles, and AI may not be different. Past experience shows that investors tend to overestimate how rapidly new technologies transform industries. As the world waits for AI to mature, Nvidia and AMD could be vulnerable if an AI bubble bursts.
Concerns about profit margins add another dimension to the situation. Nvidia’s margins have returned significantly, fueled by a shortage of AI GPUs. However, with AMD ramping up production, the supply-demand balance may shift soon.
Additionally, many of Nvidia’s top customers are developing their own data center chips, which may lessen Nvidia’s market power and profitability over time.
A glance at insider trading provides further caution. No insiders at Nvidia have purchased shares in nearly four years, while AMD executives haven’t acquired shares in more than five years. If executives see no value in their stock, it raises questions for investors.

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Laffont’s New Favorite: Chipotle
While Laffont has been selling his AI shares, he’s been investing heavily in a stock that recently completed a notable stock split: Chipotle Mexican Grill (NYSE: CMG). Chipotle executed a 50-for-1 stock split earlier this year.
According to recent filings, Coatue acquired 4,575,054 shares of Chipotle during the third quarter, making it one of Laffont’s significant holdings within the portfolio.
Chipotle’s stock has skyrocketed almost 13,900% since its IPO at $22 in January 2006, driven by customer loyalty and innovation. The chain has committed to sourcing responsibly raised meats without unnecessary antibiotics and locally sourced vegetables whenever possible, winning over dedicated customers.
Chipotle’s management has recognized that consumers are willing to pay more for high-quality food. Similar to grocery stores thriving on organic demand over the last two decades, Chipotle has managed to pass along price increases, ensuring that its fresh ingredients will never be frozen.
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Chipotle Faces Challenges Amid CEO Shakeup and High Valuation
Chipotle Mexican Grill has seen steady growth, bolstered by innovation. In 2018, the company introduced its “Chipotlane,” a drive-thru lane designed for digital orders. This concept proved to be especially useful during the COVID-19 pandemic, allowing Chipotle to create a new sales channel that boosted its business.
Despite its successes, the future looks uncertain for Chipotle. In August, Starbucks announced they would be hiring Brian Niccol, Chipotle’s CEO, to lead their company. With Chipotle’s operations performing well, this executive change poses concerns for shareholders who may be uneasy about leadership transitions.
The larger issue lies in Chipotle’s current valuation. The company’s stock is trading at a notably high multiple of 47 times forward earnings. This pricing seems steep, especially considering the modest same-store sales growth of just 6% reported for the quarter ending in September. Although Chipotle maintains distinct competitive advantages over other fast-casual dining options, realizing significant short-term gains for its stock remains challenging.
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Sean Williams has no positions in the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Berkshire Hathaway, Chipotle Mexican Grill, Nvidia, and Starbucks. The Motley Fool recommends the following options: short December 2024 $54 puts on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are of the author and do not necessarily reflect those of Nasdaq, Inc.
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