Coatue's Philippe Laffont sells CoreWeave and pivots toward Applied Materials as AI demand surges

Philippe Laffont’s hedge fund, Coatue Management, has been reshaping its artificial intelligence portfolio based on its latest U.S. Securities and Exchange Commission filings. In its most recent disclosure, Coatue sold CoreWeave, a cloud and AI data-center operator, after it had become the fund’s largest publicly traded U.S. holding.

Coatue exits CoreWeave as the stock falls

CoreWeave did not make its public market debut until early 2025, but Coatue held a stake in the company starting in 2024. Coatue led CoreWeave’s Series C funding round that year. After the IPO, the fund added to its position, and strong share-price performance helped CoreWeave surge to become Coatue’s largest holding by the end of the second quarter.

However, Coatue began trimming its stake in the third quarter and fully disposed of it in the fourth quarter. The timing coincided with a sharp reversal in the stock: CoreWeave’s share price has collapsed since October, down about 50%.

Why CoreWeave is considered highly leveraged

CoreWeave specializes in AI data centers and relies on a close relationship with Nvidia, a major shareholder, to access high-powered graphics processing units (GPUs) used for AI training and inference. The company signs long-term contracts with developers to secure GPU usage even before it builds out the required capacity.

CoreWeave then uses those contracts as collateral to obtain loans to fund data center build-outs. As a result, the business is described as highly leveraged relative to its earnings.

Backlog growth, capex pressure, and cash-flow outlook

The company’s revenue backlog increased from $15.1 billion at the end of 2024 to $66.8 billion at the end of 2025. A growing portion of that backlog is expected to translate into revenue over more than 48 months.

CoreWeave expects revenue to more than double in 2026. At the same time, capital expenditures (capex) are rising quickly, which the article says should keep the company cash-flow negative and reliant on debt to fund continued growth. The company nonetheless expects to expand its long-term operating margin to between 25% and 30%.

Valuation debate and risk trade-off

At a price described as just over 6 times trailing sales, CoreWeave may appear attractive to some investors due to its growth prospects. The article argues, however, that the risk profile remains elevated, and suggests that Coatue’s actions reflect a preference for other opportunities.

Laffont adds to Applied Materials amid chip spending

Instead of CoreWeave, the article highlights that Laffont made major purchases in Q4, including nearly doubling Coatue’s stake in Applied Materials (AMAT). Applied Materials is described as the world’s largest wafer fabrication equipment provider, serving chipmakers across both logic and memory.

Demand drivers: logic capacity and high-bandwidth memory

The article cites heavy spending by logic chipmakers to build capacity for AI accelerator chips such as Nvidia’s GPUs. It notes that Taiwan Semiconductor Manufacturing announced a capital expenditure budget of $52 billion to $56 billion for this year, up from $41 billion last year.

For memory, the article says demand for high-bandwidth memory is pushing memory chipmakers to expand capacity. Micron expects 2026 capex to exceed $25 billion and expects higher equipment spending in 2027.

Applied Materials’ positioning and growth outlook

Applied Materials is positioned to benefit from this spending, according to the article, because its equipment is described as best-in-class and its scale supports continued investment in research and development. The company also works closely with customers to meet their needs, which the article says should help Applied grow market share and increase margins.

Management expects its equipment business to grow more than 20% this year, with continued momentum in 2027. The outlook is tied to longer ramp times for customers as they build physical capacity, including cleanrooms, to take delivery of equipment. The article expects strong revenue acceleration over the next two years.

Valuation and earnings expectations

With the stock trading at about 30 times forward earnings, the article characterizes Applied Materials as relatively inexpensive versus its growth outlook. It also notes that 20% revenue growth could translate into stronger bottom-line results as margins improve, and that analysts expect earnings-per-share growth of 25% in 2027—an outcome the article links to Laffont’s decision to add to the position.