Key Points
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In the second quarter, Philippe Laffont made CoreWeave his largest holding and completely exited his position in Super Micro Computer.
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CoreWeave is arguably the best artificial intelligence cloud on the market, and Wall Street expects revenue to grow at 90% annually through 2027.
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Super Micro is a major supplier of artificial intelligence servers, but gross margins are falling and the valuation is elevated by historical standards.
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Billionaire Philippe Laffont runs Coatue Management, a hedge fund that beat the S&P 500(SNPINDEX: ^GSPC) by 40 percentage points in the last three years. In the second quarter, Laffont added shares of CoreWeave (NASDAQ: CRWV), making it his largest position. He also sold his entire stake in Super Micro Computer (NASDAQ: SMCI).
In general, Wall Street is more bullish on CoreWeave. The median target price of $157.50 per share implies 59% upside from the current share price of $99. Meanwhile, Super Micro has a median target price of $46.50 per share, which implies 16% upside from its current price of $40.
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Jim Kelleher at Argus Research is particularly bullish on CoreWeave. He recently reiterated his target of $200 per share, which implies 100% upside. By comparison, the highest target on Super Micro is $63 per share, which implies 57% upside.
Here’s what investors should know.
Image source: Getty Images.
CoreWeave: The AI stock Philippe Laffont bought
CoreWeave provides cloud infrastructure and software services for artificial intelligence (AI) workloads, and the business is firing on all cylinders. Revenue soared 134% in the third quarter, and revenue backlog rose 271% as the company struck deals with OpenAI and Meta Platforms, adding to an impressive customer list that also includes Nvidia and Microsoft.
The company has been successful in winning major technology companies as customers for two reasons. First, its data centers are purpose-built for AI, which results in up to 20% better GPU cluster performance compared to traditional clouds. Indeed, semiconductor-focused research company SemiAnalysis recently ranked CoreWeave as the best AI cloud on the market.
Second, CoreWeave has a partnership with Nvidia that grants the company early access to the latest chips. That advantage let CoreWeave bring Nvidia H100 and H200 systems to market before other clouds, and it recently became the first to provide access to Nvidia GB200 and GB300 systems, which are the absolute pinnacle of AI infrastructure.
Importantly, bears would correctly argue CoreWeave has taken on a substantial amount of debt and capital expenditures are expected to increase in the near term as the company continues to build data center capacity. Interest payments on debt consumed about 24% of revenue through the first three quarters of 2025, which is concerning.
However, it makes sense to invest aggressively in data center capacity right now. Doing so has let CoreWeave build important customer relationships, and the company seems to have a responsible borrowing strategy. CEO Michael Intrator says the company typically takes on debt only when signed contracts create a need for more infrastructure, and only if the terms cover the entire cost of the debt.
Looking ahead, Wall Street expects sales to increase at 90% annually through 2027, which makes the current valuation of 12 times sales look reasonable. I think patient investors with a time horizon of at least three years should consider buying a few shares, but I would not be so bold as to make CoreWeave my largest position like Philippe Laffont.
Super Micro Computer: The stock Philippe Laffont sold
Super Micro has become a major supplier of artificial intelligence servers because its “building block” approach to product development lets it quickly incorporate the latest chips into a wide selection of servers, meaning it is often first to market. ABI Research ranks Super Micro as the best option for customers because it develops “the most agile servers on the market.”
That recommendation notwithstanding, Super Micro is clearly struggling with competition. Its gross margin has dropped in four straight quarters, and narrowed 6 percentage points since Q3 2024 despite management saying profitability would improve in 2025. That hints at a lack of pricing power, which makes sense given that Super Micro competes with larger companies like Dell Technologies.
Beyond that, Super Micro is essentially a middleman that purchases chips from suppliers like Nvidia and Advanced Micro Devices, then incorporates those processors into servers of various configurations. While the company plays an important role in the supply chain, its business model leaves little room for innovation, which means Super Micro lacks a truly durable competitive moat.
Wall Street expects Super Micro’s earnings to increase at 29% annually over the next three years, and the stock trades at 32 times earnings. Those numbers give a price-to-earning-to-growth (PEG) ratio of 1.1, which represents a modest premium to the five-year average of 0.9. In short, gross margins are narrowing and the valuation is elevated. Investors should avoid the stock.
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Trevor Jennewine has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.