Uncapped #29 | Thomas Laffont from Coatue

**Thomas Laffont** (0:00)
I looked at maybe the top 10 to 15 P&L winners that I've had over my career on the private side. Without exception, my first opportunity to invest was a no. It might have been a no from me to the company passing, or vice versa, the company passing on me.

**Jack Altman** (0:20)
I am really excited to be here with you today, Thomas. Thanks so much for taking the time for this.

**Thomas Laffont** (0:24)
Very excited.

**Jack Altman** (0:25)
So my note to myself on this first topic is, this time, it's different, and a lot of people recently, in the last few weeks, have been saying things that are implying that a bubble might be going.
It's like there was a tweet from Brian at Sequoia that was like, this is a good time to sell your company. There have been a lot of blog posts written behind closed doors. It's a frequent topic of conversation, like valuations are expensive. We're back to 2021 multiples for a certain flavor of company. Obviously, Coatue has gone through over its last 25 years of existence, a bunch of cycles. You've seen this happen many times. I'm curious, your spot temp check, fall 2025, how do you make sense of where we are in the cycle and in capital deployment?

**Thomas Laffont** (1:20)
Yeah. I've been lucky to be doing this for a while, almost 25 years now. There are a few seminal moments that I recall as a tech investor. The first was the iPhone and Apple, and the quarterly earnings that would come out, and the absolute blowout. If consensus was one, they would print three or five. You just didn't see those kinds of beats, and the magnitude of the transformation that Apple was bringing into the market with the iPhone. So that was one.
The second, I remember, like it was yesterday, was NVIDIA when it guided its data center business to be up 100% year over year. No one thought that that could be possible. So that was obviously that and the ChatGPT moment kind of happening at the same time, right? I do think the Oracle announcement from two weeks ago was really profound and important as well.
Just a fascinating story of how long Oracle's been around and how it's been able to shed its skin and reinvent itself. What was interesting about that specific company is, if you look at the AI infrastructure build out up to this point, had really been funded with cash flows from big companies, right? So Meta, Google, Apple, Microsoft, generating incredible amounts of revenue, having very high operating margins, very high cash flow margins, and the ability to invest some of those cash flows into this AI build. What was different about the Oracle announcement is now you're seeing some leverage come into, where it's actually not just the free cash flow positive companies that are investing, it's actually free cash flow negative companies that are investing, right? So OpenAI is an example, right? Is making a huge bet, right? It's not producing free cash yet, but it kind of sees a version of the future where demand for its products kind of keep increasing. So I do think that's something that we spend a lot of time kind of looking at and thinking about. The question now will be, does the competitive intensity between the hyperscalers really start to intensify, right? We kind of had a staid oligopoly, I would say, where Amazon kind of started, then Microsoft, and then Google kind of crept in, and it was kind of the three of them for a bit. Boy, does that feel different today, right? You've got Oracle putting its foot into the ground, and now, I think, establishing itself as an absolutely key player. You could see them getting to maybe 15% market share of cloud in a few years from essentially zero. You have companies like CoreWeave, right? GPU-only cloud. So I do think the market competition is intensifying. There's more companies now. It's not just cash flow companies that are investing. Both OpenAI and Thropic are making huge investments. So I do think the stakes to me feel different than they were maybe two years ago. So that's one how it would change the element. The environment feels a little bit different to me. It's one thing if Metta is saying, well, I'm so profitable. I have so much money. I'm just going to choose to sprinkle some of my cash flows into AI. Like that's one thing. We've now moved into a different phase where I think companies are saying, no, it feels more existential. I'm actually willing to invest significantly more, maybe even more than the cash flows that I'm producing in the case of some players in the ecosystem, right, to go and win this market. So I think it's a sign of multiple things, right? And to me, the biggest one is the intensity and the criticalness is increasing. And so I think our vigilance has to increase as well.