This hedge-fund giant studied over 30 bubbles - and came away more convinced that the AI trade is the right one

By Steve Goldstein

Philippe Laffont, founder of Coatue Management, L.L.C., and his wife Ana Laffont walk to a morning session at the Allen & Company Sun Valley Conference on July 10, 2025 in Sun Valley, Idaho. Laffont's Coatue is still heavily invested in AI stocks, despite bubble warnings.

Hedge-fund giant Coatue has heard all the bubble arguments - and still comes away convinced that the right move is betting on artificial intelligence and its potential.

In a presentation dated Oct. 16, but circulated widely on the internet this weekend, the $54 billion in assets fund firm led by Philippe Laffont said it studied over 30 bubbles dating back 400 years and grouped them by more than 30 characteristics, ranging from adoption to leverage to concentration.

Coatue conceded a few points - AI leaders are too big, capex is higher than dot-com bubble, adoption is slowing, data-center growth is declining and vendor financing is raising questions.

But it pushed back on bubble fears. AI adoption, so far, is faster than the internet or personal computer did when they were released; capex, while growing, is funded with operating cash flow; market concentration is not necessarily a negative indicator; price-to-earnings multiples are nowhere near dot-com levels and other technologies, like cloud computing, took years to turn positive on a returned-on-invested-capital basis.

Also it's hard to measure the impact of AI because while some of the impact, like lower headcount, is direct, other benefits like more productive workers are harder to quantify.

The AI boom, for example, is boosting e-commerce and ads, Coatue said, citing earnings calls from Amazon (AMZN) and Shopify (SHOP).

Outside of tech, firms as diverse as trucking company C.H. Robinson (CHRW) and mortgage provider Rocket Cos. (RKT) are touting AI's benefits.

Coatue says profits will support the investment over five to 10 years.

So it gives a two-thirds probability to the idea of AI abundance - that AI increases productivity and GDP, while inflation is contained and tech continues to lead - and a one-third chance to the AI bubble bursting, causing the stock market to crash and the economy to fall into a recession.

Other than remaining bullish of AI, the presentation didn't indicate its current positioning.

Its 13-F filing covering the second quarter does show a heavily AI-tilted portfolio, with top investments being CoreWeave (CRWV), Meta Platforms (META), Amazon.com, GE Vernova (GEV) and Microsoft (MSFT), with the firm also having 5% of its holdings in Constellation Energy (CEG), Taiwan Semiconductor Manufacturing Co. (TSM) and Nvidia (NVDA).

-Steve Goldstein

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10-27-25 1036ET