In today's AI technology boom, large language models and various AI applications continue to dominate headlines and increasingly permeate our daily lives. Some are bullish on the technology, while others question whether it's just another short-term bubble. Steven A. Cohen, founder of renowned asset management powerhouse Point72, believes that AI represents a "secular growth trend that's here to stay."
Carl Wong
Managing Director, Head of International Public Market
Artificial intelligence is a critical component of the future investment landscape. DeepSeek's emergence has undoubtedly sent ripples through the market, triggering the revaluation of related stocks and significantly increasing volatility, while also creating substantial alpha opportunities for investors.
This January, Point72's fund manager noted that China's vast data resources created uniquely favorable conditions for artificial intelligence and machine learning development. DeepSeek's breakthrough not only validates his precise read on industry trends but also demonstrates his deep understanding of China's market dynamics. Despite operating from the United States, his ability to gain nuanced insights into global market movements, particularly China's evolving landscape, showcases remarkable foresight.
Even if Point72 isn't on your radar, you may be familiar with the hit financial TV show "Billions." The show's protagonist Bobby, a hedge fund titan controlling billions in Wall Street capital, leverages his market instincts and exceptional intellect to transform seemingly unrelated information into actionable investment signals. Bobby's character draws inspiration from Steve Cohen himself.
Scene from the TV show Billions
Cohen, widely regarded as "one of the greatest traders of his generation," founded SAC Fund in 1994, which delivered average annual compound returns exceeding 30%, making it one of the highest-performing hedge funds globally and the precursor to Point72.
Point72 was established in 2014. As of January 1, 2025, Point72 maintains over 185 investment teams and more than 2,800 employees worldwide.
In the artificial intelligence space, Point72 has demonstrated significant investment acumen. In October 2024, Point72 launched an AI-focused fund that delivered impressive returns in just three months.
Noah Holdings' (HKEX: 6686, NYSE: NOAH) brand series ARK "GPTalk" brings you the story of legendary investor Steve Cohen and illustrates how elite institutions like Point72 capitalize on market volatility through their resource advantages, superior information networks, and world-class investment teams.
From SAC to Point72: The Making of a Hedge Fund Legend
Born in 1956 to a middle-class family in Long Island, New York, Steve Cohen exhibited exceptional mathematical aptitude early on and developed an interest in stocks by age 13. While at UPenn's Wharton School in 1978, he mastered "tape reading," predicting stock movements by analyzing price and volume patterns. After graduation, Cohen joined Gruntal & Co. as a junior trader and quickly rose to lead his own team managing $75 million.
On October 19, 1987, when markets experienced a black swan event with stocks plunging over 22% in a single day, Cohen made an audacious move amid Wall Street panic, deploying all available capital in long positions. The following day, as markets rebounded sharply, he emerged as the firm's only trader to book substantial profits.
In 1992, Cohen launched SAC Capital Advisors using his initials. His career trajectory then accelerated dramatically: SAC delivered an extraordinary 51% return in its first year and nearly quadrupled in scale by 1995. In 1998 and 1999, SAC generated approximately 70% returns for two consecutive years, stunning Wall Street peers and earning Cohen the moniker "Wall Street Hedge Fund King." Before the 2000 dot-com bubble burst, Cohen had already begun shorting the market, aggressively increasing short positions as the crisis unfolded and delivering a 73% return that year—cementing his legendary status.
During the SAC era, the firm's research team operated as a cohesive unit centered around Cohen, with fund managers functioning as his high-level intelligence network. Their primary mandate was providing Cohen with a market-beating information edge. During this period, SAC primarily managed proprietary capital, with AUM growth driven largely by performance-based appreciation rather than external inflows.
In April 2014, SAC rebranded as Point72, positioning itself as a family office with approximately $10 billion in initial capital.
Building a Multi-PM Platform Hedge Fund
In 2018, Point72 resumed accepting outside capital, transitioning back to a hedge fund structure and diversifying its strategy mix to include quantitative and global macro approaches. The firm simultaneously reduced Cohen's direct influence on investment decisions by distributing portfolio management responsibilities across multiple teams, aiming to build a platform-based asset management business.
As a multi-PM platform hedge fund, Point72 enables its numerous investment teams to focus on their core competencies. This model diverges from the traditional star portfolio manager approach, embracing a decentralized structure with inherently greater risk diversification compared to single-manager funds.
According to industry reports, Cohen directly manages less than 5% of Point72's assets. The majority of capital is allocated across hundreds of PM teams, each operating under defined investment parameters including allowable sectors, position sizing limits, and specific concentration and liquidity constraints. Concurrently, Point72 maintains robust performance attribution systems to measure each PM's contribution.
Point72's strategy allocation centers primarily on discretionary long-short equity, complemented by quantitative and global macro approaches, with disciplined drawdown and volatility management. Key strategies include:
Bullish on AI: "A Structural Growth Opportunity"
In September 2024, Steve Cohen announced his retirement from active trading after more than three decades. However, the 68-year-old hedge fund titan hasn't stepped away entirely—he continues as Point72's co-CIO, focusing on firm-wide growth initiatives and talent development, though no longer directly managing client portfolios.
Meanwhile, AI is transforming technology and investment landscapes at unprecedented speed. From hardware constraints to capital-intensive development cycles, AI's evolution is driving profound technological shifts and creating new capital market dynamics.
In April 2024, Cohen publicly expressed strong conviction in AI's long-term potential. He views AI as a "structural growth opportunity," comparable to the technological revolution of the 1990s. Cohen believes AI will not only reshape technology sectors but fundamentally transform traditional industries including manufacturing, energy, and healthcare.
Cohen emphasized that AI's disruptive potential stems from its capacity to dramatically enhance productivity and optimize resource allocation, creating substantial value across the business landscape. He noted that Point72 itself had improved operational efficiency and realized $25 million in cost savings by implementing large language models like ChatGPT.
On October 1, 2024, Point72 launched a dedicated AI equity strategy, focusing on AI infrastructure and enabling technologies. The fund employs a long-short approach—the long book concentrates on defensible tech companies with high barriers to entry, particularly leading GPU manufacturers. The short book targets both technology transition plays and AI imposters—companies experiencing stock price appreciation from AI association despite lacking genuine technological moats.
As Dennard scaling reaches its limitations, chip performance improvements may no longer deliver cost efficiencies, with silicon's physical properties creating bottlenecks. Cloud infrastructure and architectural innovations (particularly CPU and GPU parallel processing capabilities) represent the critical path to overcoming these constraints. Sanchez highlights that GPUs have superseded traditional CPUs in AI compute importance, explaining Point72's strategic focus on leading GPU manufacturers with sustainable competitive advantages.
Sanchez emphasizes that identifying companies with defensible technological moats is the cornerstone of successful AI investing. He observes that many investors overweight AI applications while underappreciating silicon infrastructure, resulting in incomplete understanding of AI's value chain. The capital-intensive nature and rapid iteration cycles of AI development create compelling public market opportunities. Developing cutting-edge AI models requires approximately $500 million today, with costs potentially doubling in coming years—creating barriers to entry that favor established players.
On January 20, 2025, DeepSeek launched its open-source large language model DeepSeek R1, achieving performance comparable to OpenAI at under one-tenth the training cost, sending shockwaves through Silicon Valley. At a Miami industry conference, Cohen characterized DeepSeek's breakthrough as a positive catalyst accelerating industry development, potentially leading to AI systems with capabilities beyond human cognition.
In today's rapidly evolving global technology landscape, AI has emerged as a fundamental driver of industrial transformation and value creation. AI investment will remain a focal point in global technology and capital markets for the foreseeable future.
