Philippe Laffond’s hedge fund Cortu Management just made a big purchase in nontraditional data center stocks.
Philippe Lafont is a billionaire investor best known for founding the hedge fund Cortu Management. Hedge funds are widely known for their sophisticated trading skills and secretive nature, but Form 13F provides individual investors with a glimpse into the stocks that financial institutions buy and sell on a quarterly basis.
Cotu’s latest 13F included a number of trades in major technology stocks, particularly those aiming to disrupt artificial intelligence (AI). But the fund also made big acquisitions in data center opportunities, which were previously lesser-known opportunities. That’s correct! There are opportunities in data centers beyond Nvidia.
Below, we analyze the data center opportunity on Coatue’s radar and assess whether now is a good time to buy the stock.
What data center stock did Coatue Management just buy?
According to the latest 13F, Kochu purchased 2.9 million shares of Constellation Energy. (CEG -0.38%) In the second quarter, its positions increased by 139%.
I don’t blame you if you’re confused about how power companies are considered a data center opportunity. The problem is that data centers consume a lot of power. As AI becomes a tailwind for companies across all industries, companies will need to invest in more energy-efficient infrastructure.
This is where Constellation Energy comes into focus. The company specializes in nuclear power, which is widely recognized as a superior alternative to traditional data center power sources.
Image source: Getty Images.
Recent major developments regarding nuclear power
This year, several major technology companies are quietly moving at the intersection of nuclear power and data centers. In March, Amazon’s cloud division Amazon Web Services (AWS) acquired a nuclear-powered data center from Talen Energy. And just this week, the company signed contracts with national power companies Energy Northwest and Dominion Energy. The companies will support Amazon’s development and exploration of how small modular reactors (SMRs) can accelerate their nuclear power projects.
These deals by Amazon follow similar deals by Alphabet, which relies on Kairos Power to develop its SMR.
While the latest moves by Amazon and Alphabet have been dominating the headlines lately, Constellation Energy isn’t far behind. The company has been working closely with Microsoft for quite some time, and a few weeks ago both industry leaders announced plans to restart the nuclear power plant at Three Mile Island, Pennsylvania.
Should you buy Constellation Energy stock now?
The graph below shows Constellation’s price-to-earnings ratio (P/E) trend over the past six months.
CEG PE ratio data by YCharts.
What’s clear here is that Constellation has experienced significant valuation expansion recently. After announcing the acquisition of Three Mile Island on September 20, Constellation’s stock price rose 12%. According to one press release, the price movement is quite rapid.
While I don’t recommend timing buying activity, I think investors should approach Constellation with some degree of caution at this point. It’s no coincidence that Amazon and Alphabet have made some moves with nuclear power companies following their deals with Microsoft and Constellation.
I think we’ll see more companies considering nuclear solutions for their data center needs. As such, Constellation stock could gain some momentum based on future news, whether or not the company is directly involved.
The good thing here is that the AI story is still in its infancy. Therefore, demand for adjacent opportunities such as data center services and nuclear power should continue to materialize in the long term.
Constellation Energy stock may seem a little expensive at the moment, but Courtue’s investment is a smart move. Investors with a long-term horizon may want to keep this name on their radar.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Suzanne Frey, an Alphabet executive, is a member of the Motley Fool’s board of directors. Adam Spatacco has held positions at Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Constellation Energy, Microsoft, and Nvidia. The Motley Fool recommends Dominion Energy and recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
