Coatue Management suffered its steepest monthly decline in more than a year in July, as the sharp sell-off in artificial intelligence and semiconductor stocks weighed heavily on the technology-focused hedge fund, according to a report by Bloomberg.
The report cites an unnamed person familiar with the matter as revealing that the firm’s flagship hedge fund fell 8.3% during the month, trimming its year-to-date gain to 14.3%.
The setback adds to mounting evidence that July’s reversal in AI-related equities hit a number of prominent hedge fund managers with concentrated exposure to the sector. Multi-strategy giant Millennium Management also posted a monthly loss as technology shares retreated, while several quantitative managers proved more resilient during the volatile period.
Coatue, which manages approximately $90bn, has been one of the industry’s strongest advocates of the long-term investment case for artificial intelligence. Founder Philippe Laffont has repeatedly argued that AI is driving a multi-year investment supercycle, resulting in significant portfolio exposure to companies benefiting from AI infrastructure spending.
However, many of those holdings came under heavy pressure during July as investors questioned the pace and sustainability of capital expenditure across the AI ecosystem.
According to the firm’s most recently disclosed holdings, its four largest US long positions at the end of March all declined sharply during the month. Taiwan Semiconductor Manufacturing Co. and GE Vernova each fell by more than 15%, while Lam Research and Applied Materials dropped more than 29%.
The technology sell-off was intensified by the forced liquidation of positions at AI-focused hedge fund Situational Awareness, which sold the majority of its public equity portfolio to Citadel after facing margin calls, adding further pressure to semiconductor and AI-related stocks.
Despite the difficult month, Coatue remains comfortably positive for the year after a volatile first half. The fund lost nearly 5% in March as geopolitical tensions in the Middle East unsettled markets before rebounding with its strongest monthly performance in roughly 25 years during May.
