Billionaire Philippe Laffont Dumps Hot AI Stock for S&P 500’s Worst Performer - What Does He See That Wall Street Misses?

Billionaire investor Philippe Laffont just made a move that's raising eyebrows across Wall Street.

He's dumping a popular artificial intelligence stock while loading up on the S&P 500's absolute worst performer.

The Contrarian Play

Laffont's firm executed a massive position shift that defies conventional market wisdom. While everyone chases AI hype, he's betting big on the index's biggest loser.

Wall Street's Blind Spot

The move suggests Laffont sees value where others see only pain. Maybe he's spotted a turnaround story brewing—or knows something the analyst herd completely missed.

Timing the Unpopular

Buying when there's blood in the streets takes guts. Especially when that blood belongs to the market's most hated stock.

Because nothing says 'smart money' like betting against the consensus—until it works, of course. Then suddenly everyone acts like they saw it coming all along.

Image source: Getty Images.

Meta Platforms: The stock Philippe Laffont sold in the second quarter

Meta Platforms owns three of the four most popular social media networks in the world as measured by monthly active users: Facebook, Instagram, and WhatsApp. In total, those web properties draw 3.4 billion people daily, which makes Meta an indispensable advertising partner for countless brands. Indeed, it is the second largest ad tech company in the world.

Meta is successfully using artificial intelligence (AI) to deepen user engagement across its social media sites. "Advancements in our recommendation systems have improve[d] quality so much that it has led to a 5% increase in time spent on Facebook and 6% on Instagram," CEO Mark Zuckerberg told analysts on the Q2 conference call.

Meta Platforms reported strong Q2 financial results that beat estimates on the top and bottom lines. Revenue increased 22% to $47.5 billion, an acceleration from 16% growth in the prior quarter. Operating margin expanded 5 points, and generally accepted accounting principles (GAAP) earnings jumped 38% to $7.14 per diluted share. Investors have good reason to think that momentum will continue.

analyst Malik Ahmed Khan earlier this year wrote, "Meta is a digital advertising juggernaut poised to increase its market share." His conviction not only reflects success with AI but also that Meta recently introduced advertising on WhatsApp and Threads, creating incremental sources of revenue.

Looking ahead, Grand View Research estimates ad tech spending will grow at 14% annually through 2030. And Wall Street expects Meta's earnings to increase at 17% annually during the next three years. That consensus makes the current valuation of 27 times earnings look very reasonable

So, why did Laffont sell Meta stock in Q2? Odds are he was rebalancing his portfolio because shares jumped 26% during the first half of the year. I doubt his decision reflects a lack of conviction. Meta is still the second-largest holding in his hedge fund. So, patient investors should feel comfortable buying a small position today.

The Trade Desk: The stock Philippe Laffont bought in the second quarter

The Trade Desk is the largest demand-side platform (DSP) for the open internet. A DSP is a type of ad tech software that helps brands run campaigns across digital channels, and the open internet refers to the network of websites and applications not controlled by tech giants like Meta Platforms and's Google.

The Trade Desk dominates connected TV (CTV) advertising, the fastest-growing category of the broader digital advertising market. But investors are worried about competitive pressure from, which recently struck deals to bring ad inventory fromandto its DSP. Amazon also added AI tools to its DSP that could help it take share in other areas of the open internet.

The Trade Desk reported somewhat disappointing financial results in Q2 despite exceeding estimates on the top and bottom lines. Revenue ROSE 19% to $694 million, down from 25% growth in the prior quarter, and non-GAAP earnings jumped 5% to $0.41 per diluted share. The stock sold off sharply following the report, partly because sales slowed while rivals Meta and Amazon saw sales accelerate.

So, why did Laffont buy The Trade Desk in Q2? Odds are he simply wanted to start a position after the stock dropped more than 50% in Q1. However, the position is very small, less than 0.5% of his portfolio, so investors should not interpret his purchase as a sign of high conviction.

Wall Street estimates The Trade Desk's earnings will increase at 20% annually during the next three years. The current valuation of 55 times earnings is still somewhat expensive, but it's also the cheapest price-to-earnings (P/E) multiple in five years. Patient investors interested in owning the stock should start with a small position.