TLDR
- Philippe Laffont’s Coatue Management has sold 89% of its AMD position while establishing a new stake in Arm Holdings
- Laffont projects Arm Holdings could reach a $787 billion market cap by 2030, representing a 340% increase from current levels
- Arm Holdings stock jumped 11% after announcing a partnership with OpenAI to develop custom data center CPUs
- The chip designer saw royalty revenue increase 25% year-over-year as more companies adopt its v9 architecture
- Arm now serves 70,000 enterprises using its data center chips, up 14-fold since 2021
Philippe Laffont, who manages hedge fund Coatue Management, has dramatically reduced his position in Advanced Micro Devices. The fund sold 89% of its AMD shares over the past year. During the same period, Laffont opened a new position in Arm Holdings.
Coatue Management’s publicly traded equity portfolio beat the S&P 500 by about 95 percentage points during the three-year period ending in June. This track record makes Laffont’s investment moves worth watching. His fund’s recent 13F filing revealed the shift from AMD to Arm Holdings.
Laffont increased his AMD holdings in late 2022 and early 2023 when artificial intelligence stocks began attracting investor attention. AMD reached the fund’s third-largest publicly traded equity position at its peak. The selling began in mid-2023 and accelerated through recent quarters.
The hedge fund manager also trimmed his Nvidia position by 77% since early 2023. He added back some Nvidia shares in the most recent quarter. The timing of the AMD sale proved less than ideal, as AMD stock has outperformed Nvidia since June.
AMD recently secured a major deal with OpenAI worth up to 6 gigawatts of GPU purchases over multiple years. The agreement includes warrants that give OpenAI the option to buy AMD shares. This deal validates AMD’s upcoming MI450 GPU platform.
Arm Holdings Gains Laffont’s Attention
Laffont’s new Arm Holdings position reflects his long-term investment approach. He projects the company’s market cap could reach $787 billion by 2030. That represents growth from the current $179 billion valuation.
Arm Holdings doesn’t manufacture chips directly. The company licenses basic chip architecture that other designers build upon. Its technology dominates the smartphone market due to energy efficiency advantages.
The company now targets the data center market where power consumption concerns are growing. Energy supply constraints could limit data center expansion in coming years. Arm’s efficient architecture offers a solution to this problem.
The number of enterprises using Arm-based data center chips reached 70,000 in 2024. This figure represents a 14-fold increase since 2021. Nvidia used Arm’s intellectual property for its Grace CPU in Hopper and Blackwell server systems.
OpenAI Partnership Drives Stock Rally
Arm Holdings stock rose 11% after announcing its OpenAI partnership. The companies will collaborate on custom server processors for data center operations. OpenAI also signed a separate manufacturing agreement with Broadcom for AI-specific chips.
Monday’s trading session saw 55,814 call option contracts change hands on Arm stock. This volume was double the typical daily amount. The put-call ratio fell to 0.14, indicating strong bullish sentiment among options traders.
First quarter fiscal 2026 results showed revenue of $1.05 billion and earnings of $0.35 per share. Royalty revenue jumped 25% to $585 million. Higher royalty rates for the v9 architecture drove this growth.
Wall Street analysts issued 18 Buy ratings and three Hold ratings over the past three months. The average price target stands at $172.28. Individual analyst targets range from $100 to $225 based on different growth assumptions.
Arm Holdings trades at approximately 260 times trailing earnings. This premium valuation reflects expectations for growth in AI chip markets. The stock has rallied 23% over the past two weeks, approaching its 52-week high of $182.88.
SoftBank Group maintains majority ownership of Arm Holdings. The Japanese conglomerate has been securing financing backed by Arm shares. These funds will support additional investments in OpenAI, creating connected interests between the companies.
Qualcomm announced plans in September to use Arm’s v9 architecture in future smartphone chips. The company will report second quarter fiscal 2026 earnings on November 5. Investors will watch for updates on AI data center growth and future guidance.
