Billionaire Philippe Laffont Just Sold 15% of Coatue's Tesla Stake and More Than Doubled His Position in One of Wall Street's Cheapest Artificial Intelligence (AI) Stocks

In case you missed it, one of the most important data releases of the entire fourth quarter occurred on Friday, Nov. 14.

While you might have been eager to clock out or start your weekend early, institutional investors with at least $100 million in assets under management (AUM) were filing Form 13F with the Securities and Exchange Commission. This required filing, due no later than Nov. 14, concisely lays out which stocks, exchange-traded funds, and select options Wall Street's most revered and successful money managers have been buying and selling (in this instance, during the third quarter).

Even though 13Fs aren't perfect -- they can provide a snapshot that's up to 45 days old when filed -- they're invaluable in the sense that they can help investors spot the stocks and trends intriguing Wall Street's greatest investors.

Image source: Getty Images.

One of these investing greats is billionaire Philippe Laffont, who's overseeing close to $41 billion in AUM at Coatue Management, as of Sept. 30. Laffont is often fairly active from one quarter to the next, and he's a big fan of growth companies that have the potential to disrupt their respective industries.

But during the September-ended quarter, Coatue's billionaire boss trimmed his stake in North America's innovative electric-vehicle (EV) leader Tesla (NASDAQ: TSLA) by 15%. All the while, he oversaw a 130% increase in what can rightly be described as one of the cheapest artificial intelligence (AI) stocks on the planet.

Is Tesla headed for a breakdown?

Coatue Management's billionaire investor has been a continuous holder of Tesla stock since the first quarter of 2020.

The lure of Tesla, from an investment standpoint, has long been its first-mover advantage in the EV arena. It's the first automaker in more than half a century to successfully build itself from the ground up to mass production. In 2023 and 2024, the company delivered approximately 1.8 million EVs each year.

Optimists have also come to appreciate CEO Elon Musk's efforts to diversify the company away from selling and leasing EVs. Tesla's energy generation and storage segment offers the potential to soften the cyclical ebbs and flows associated with selling EVs, while efforts to develop a humanoid robot, known as Optimus, have investors looking to the future.

Nevertheless, Philippe Laffont is a seller of Tesla stock. He's dumped more than 3.12 million shares (64% of Coatue's position) since March 31, 2023, and reduced his fund's stake by 307,780 shares (15%) in the latest quarter.

Profit-taking is the most logical explanation for this selling activity. Shares of the company have risen almost tenfold since Laffont first bought in nearly six years ago. Tesla stock has also doubled since Coatue's position in the company peaked at approximately 4.85 million shares in the first quarter of 2023.

But there's the real possibility that more factors are behind Laffont's decision to trim his fund's stake in Tesla.

For example, Tesla cut the sales price of its EV fleet on more than a half-dozen occasions over the last two and a half years. According to commentary from Musk during his company's 2023 annual meeting, EV pricing is dependent on consumer demand. Not only are these price reductions tangibly hurting Tesla's vehicle margin, but they're also an indication that competitive pressures are mounting.

Additional issues can be revealed by examining Tesla's income statements in more detail. Roughly 40% of Tesla's pre-tax income in the third quarter traced back to automotive regulatory credits and net interest income, which are both unsustainable and non-innovative income sources. It's not been uncommon in previous quarters for these two categories to account for 50% or more of the company's pre-tax income.

Perhaps most damning is the reality that many of Elon Musk's promises have failed to materialize. Claims of Level 5 full self-driving being "one year" away for the last 11 years, and one million robotaxis being on American roads by 2020, demonstrate that Musk often fails to deliver. If these unfulfilled promises were removed from Tesla's valuation, it could be argued that its shares would plummet.

Image source: Getty Images.

This is the new apple of Philippe Laffont's eye in the AI space

Coatue Management's billionaire boss has been doing his fair share of buying, too! Although 10 new positions were added to his fund during the third quarter, it's the buying tied to an existing position that should intrigue investors.

During the September-ended quarter, Laffont oversaw the purchase of 1,128,826 shares of China-based Alibaba Group (NYSE: BABA), representing a 130% increase in the number of shares Coatue had in its portfolio at the midpoint of 2025.

Let's state the obvious: China stocks come with an added layer of risk that U.S.-based companies don't contend with. The unpredictable regulatory oversight of public companies in China can complicate things, which is often why China stocks trade at lower valuation multiples than their American peers. Nevertheless, Laffont may have stumbled upon an incredible value in the AI space.

Alibaba is best known as the leading e-commerce provider in the world's No. 2 economy by gross domestic product. According to data found via the International Trade Administration, Alibaba's Taobao and Tmall account for a whopping 44% share of China's online retail sales, which is 20 percentage points more than its next-closest competitor, JD.com.

Whereas e-commerce is a mature, highly competitive, and generally low-margin industry in the U.S., it remains a relatively faster-growing opportunity in China. This is due to a burgeoning middle class in the world's No. 2 economy, which has the potential to sustain strong growth rates and cash flow for Alibaba.

However, the company's most exciting growth opportunity is undoubtedly its AI cloud infrastructure service operations. Alibaba is incorporating generative AI and large language model solutions into Alibaba Cloud, enabling its subscribers to enhance their businesses and, in the process, boost its own growth rate and operating cash flow.

During the June-ended quarter, Alibaba's Cloud Intelligence Group sales surged 26% from the prior-year period to a currency-converted $4.66 billion. The company specifically notes that "AI-related product revenue maintained triple-digit year-over-year growth for the eighth consecutive quarter."

The final puzzle piece that likely enticed billionaire Philippe Laffont to more than double his fund's stake in Alibaba is its comparatively cheap valuation. Shares can be purchased for about 16 times forward-year earnings. This is notably lower than the AI-centric "Magnificent Seven" stocks (including Tesla), and it doesn't even account for Alibaba's mammoth net cash position.

Sean Williams has positions in JD.com. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends Alibaba Group and JD.com. The Motley Fool has a disclosure policy.