Julian Robertson was an investing legend whose Tiger Management fund was one of the very first hedge funds on Wall Street. He mentored numerous money managers who went on to create their own hedge funds, cheekily called Tiger Cubs.

One of the stars who emerged from Robertson’s tiger den was Chase Coleman. Given $25 million to launch his own hedge fund, Tiger Global Management has grown it to $23 billion in assets under management.

For two decades, the billionaire investor generated fabulous returns of 21% annually, until the dramatic selloff in tech stocks in 2022. The hedge fund plunged 56% that year and he’s been clawing his way back since.

Coleman is still a big believer in tech stocks and his top three holdings, representing 35% of the portfolio’s total, are premier companies in the sector. Let’s dive into why ​​these stocks are so heavily weighted in the hedge fund.

24/7 Wall St. Insights:

• Billionaire hedge fund operator Chase Coleman is a respected Wall Street money manager whose Tiger Global Management fund has $23 billion in AUM.
• Coleman’s three biggest holdings account for more than one-third of his portfolio and all are steeped in AI.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Meta Platforms (META)

Social media giant Meta Platforms (NASDAQ:META) has been on a tear since the market recovery began in late 2022. It coincided with the return of digital ad spending that helped lift META stock from $112 to $591 per share today though it had been as high as $638 per share in early December.

Meta has embraced artificial intelligence to help drive engagement across the likes of Facebook and Instagram, while also generating more digital ads across to its family of platforms. It noted that over 1 million advertisers use its AI tools and in just one month, more than 15 million ads were created.

Meta also developed its own large language models (LLM) called Llama, which is now commercially available for use by developers. CEO Mark Zuckerberg says it is quickly becoming the industry standard.

META stock is Coleman’s largest position, representing 18% of the total, but he has owned shares since 2018 when the company was still called Facebook. The fund owns 7.47 million shares currently valued at almost $4.3 billion.

Microsoft (MSFT)

The second largest stock in the Tiger fund belongs to Microsoft (NASDAQ:MSFT), not surprisingly another tech stock heavily invested in AI. Its $13 billion investment in ChatGPT creator OpenAI cemented its leadership position in the space. It has arguably become the best representation of how companies can leverage the use of artificial intelligence in their organization as Microsoft has integrated the technology throughout its platforms and products. There still remains the question of how it is going to monetize AI.

That could come from Microsoft CoPilot, a suite of AI-driven assistants, or Azure, its cloud-based computing platform. It says more than 65% of Fortune 500 companies now use its Azure OpenAI service. Azure Arc, which lets companies manage resources across platforms, whether on premise, in the cloud, hybrid environments, or at the edge. It has 33,000 customers, double what it had just last year.

Microsoft is another long-term holdings of Coleman, who first bought it at the same time he bought Meta. He owns 5.34 million shares valued at $2.3 billion, or just shy of 10% of the hedge funds portfolio.

Alphabet (GOOG)(GOOGL)

It ought to come as no surprise then that Coleman’s third-largest holding is Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), another AI stalwart. It took him a year longer to pick up his first shares of the tech giant, but he has quintupled his holdings over the past five years and now owns 10.3 million shares worth $1.71 billion. That’s good for a 7.3% share of Tiger Global’s portfolio.

It is notable, though, that Coleman owns Alphabet’s Class A shares (GOOGL) and not the Class C shares (GOOG). The difference is the Class A stock comes with voting rights, which gives it a say in company decisions. The two classes tend to move similarly but are usually priced slightly differently. GOOG currently trades at $192.69 per share while GOOGL goes for $191.24 per share.

Similar to Meta, Alphabet lives and dies by ad revenue, which accounts for 75% of total revenue. Third-quarter ad revenue of $65.9 billion was up 10% year-over year and helped GOOGL stock make the same kind of run higher that META stock did over the past two years, though it only doubled in value.

Alphabet has taken a holistic approach to AI using it across data centers, chips — both Nvidia (NASDAQ:NVDA) accelerators and its own in-house Trillium chips — and a global fiber network. In particular, its AI Overview a summary of a user’s search query and is helping to drive greater user engagement.