27.5% of Stanley Druckenmiller's $3.7 Billion Portfolio Is Invested in These 3 Under-the-Radar AI Stocks

Stanley Druckenmiller is in an elite league of investors that includes the likes of Warren Buffett. He ran his hedge fund firm, Duquesne Capital Management, for 30 years, posting eye-popping average annual returns of 30%. While Druckenmiller closed the firm in 2010, the George Soros protégé is still investing through his family office, the Duquesne Family Office, making him a great model for investors to follow. Roughly 27.5% of Druckenmiller's portfolio is invested in three under-the-radar artificial intelligence (AI) stocks.

Natera: 15% of the portfolio

Druckenmiller's largest position at the end of the fourth quarter was in the molecular biotech company Natera (NASDAQ: NTRA). Duquesne's position at the end of the fourth quarter amounted to over $564 million.

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Natera combines cell-free DNA technology with statistical algorithms powered by machine learning to identify diseases and conditions . The company's goal is to provide a personalized form of genetic testing that can inform people of conditions and diseases earlier in their life cycles. Currently, the company focuses on women's health, oncology, and organ health. In women's health, Natera created minimally invasive tests to identify genetic conditions like Down syndrome. In oncology, the company developed a personalized blood DNA test, and in organ health the company makes tests to evaluate for kidney, heart, and lung transplant rejection, as well as tests for chronic kidney disease.

In recent quarters, Natera's execution really started to pay off. Revenue of $476 million in the fourth quarter jumped 53% year over year, as processed tests climbed sharply. After turning cash-flow-positive in the first quarter of 2024, Natera generated $46 million of free cash flow in the fourth quarter. The company also trimmed its losses in 2024 from $3.78 per share to $1.53.

While the stock is not cheap trading at nearly a $19.5 billion market cap, the company is scaling its current offerings, has lots of expansion opportunities, and boasts a clean balance sheet with nearly $1 billion of cash with very little debt, so the company looks well positioned.

Coherent: 7.2% of portfolio

Coherent (NYSE: COHR) designs optoelectronic components, devices, and laser systems for companies in the industrial, communications, and electronics industries. So how does this fit into AI? Well, the company's ultra-quick optical transceivers and optical components have powerful bandwidth that plays a critical role in powering data centers and AI applications. In fact, the AI chip king Nvidia buys Coherent's transceivers.

Coherent got acquired in 2022 by II-VI Incorporated, which then changed its name to Coherent Corp. The stock has been crushed this year, along with others that had benefited from the AI trade, as investors continue to question future demand and the necessary resources to build effective AI applications. But management is counting on AI to drive future appreciation. In its second quarter of its fiscal year 2025, Coherent generated record revenue of $1.43 billion, up 27% year over year. The company also generated $0.44 per share of earnings in the quarter, while gross margin continued to expand.

In the near term, the stock is likely going to live and die with the AI trade. But trading at less than 15 times forward earnings, the valuation is not terribly demanding for a stock with such high growth potential. While Druckenmiller likes to buy highflying AI stocks, he's also disciplined and will sell when he thinks a stock is too expensive, similar to what he did with Nvidia not too long ago. The billionaire must think the price is reasonable.

Coupang: 5.3% of portfolio

The food-delivery and logistics company Coupang (NYSE: CPNG) is now based in Seattle but has offices all over the world, including significant operations in South Korea. The company provides a slate of delivery services including same-day groceries as well as other merchandise. Coupang positioned itself as the Amazon of South Korea. The company offers a membership program in which customers pay a low monthly fee for free food delivery, a media streaming service, and free delivery and installation on orders such as furniture, household appliances, and even tires.

In 2024, Coupang grew revenue by 24% year over year, while adjusted earnings fell about 15% to $0.22 per share. The company also continues to see spending on its platform among its older customer cohorts grow and has aspirations to grow adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins, currently around 4.5%, to 10% long-term.

Trading at about 57 times forward earnings, Coupang will need need to ramp up its growth to deserve that kind of valuation. But the company has been expanding. While South Korea is the primary market, the company also launched its service in Taiwan in 2021 and can currently offer next-day food delivery and free shipping on millions of other products. In 2024, Coupang acquired Farfetch Holdings, a global fashion marketplace that connects customers in more than 190 countries and territories with boutiques and other luxury fashion brands. The stock is a little expensive for my taste right now but undoubtedly shows a lot of promise.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool recommends Coherent and Coupang. The Motley Fool has a disclosure policy.