When you look through the portfolios of some billionaire investors, it’s quite astonishing to view the stock charts of their positions and the financials.
Not only are the charts in sharp uptrends but the companies are spitting out bucket loads of cash too.
The world’s wealthiest investors tend to make calculated bets and amass stocks before they pop. They’re also able to identify trends before they become mainstream and make moves that historically have led to enormous wealth.
For the ordinary investor, tracking the moves of billionaires and hedge funds offers a rare glimpse into market opportunities and thanks to the required reporting disclosures of the Securities and Exchange Commission, it’s possible to get early insights with careful scrutiny of 13F filings. So what stocks are popular now among billionaires?
1. Nvidia
If billionaire buying activity is to be believed, the AI revolution is just getting started and NVIDIA is the poster child for this trend.
The company’s dominance in the graphics processing unit (GPU) market has placed it firmly as the key player in the rapidly growing artificial intelligence sector.
Hedge fund managers like David Tepper of Appaloosa Management have significantly increased their positions in Nvidia, betting that AI will transform industries from healthcare to finance.
Without NVIDIA’s GPUs, training large AI models is simply not feasible, and as demand for AI technology skyrockets, so too could Nvidia’s stock price.
So why do billionaires flock to NVIIDA? Last quarter, Jensen Huang’s company reported a remarkable 101% year-over-year revenue growth, largely driven by surging demand for its AI-focused products.
Nvidia’s technological edge and near-monopoly in the GPU market has also established a high barrier to entry for competitors, or in the words of Buffett a near impenetrable moat.
And with AI adoption still in its early stages, Nvidia has the very real possibility of reporting exponential growth in the coming years.
2. Alphabet
Alphabet, the parent company of Google, is another stock that billionaires can’t seem to get enough of due to its exposure to advertising, cloud computing, and AI. Even after decades of growth it still has the potential to climb higher while producing monstrous cash flows.
Ken Fisher’s Fisher Investments is one of many hedge funds that have increased their stakes in Alphabet. The company’s core business, digital advertising, remains strong, but it’s the investments in AI and cloud services that have caught the attention of savvy investors.
So what is it that has attracted billionaires specifically to Alphabet? No doubt, advertising remains the cash cow for Larry and Sergey’s firm but Alphabet’s other businesses like Google Cloud and its AI initiatives are showing significant promise.
Importantly, Alphabet has recognized the threat from Open AI and is investing heavily in artificial intelligence with projects like Bard, its conversational AI model designed to compete with OpenAI’s ChatGPT.
Plus, Alphabet has consistently grown its revenues, with a 7% year-over-year increase in Q2 2024, driven by its cloud segment and digital ads.
3. Meta Platforms
Meta Platforms is another stock that billionaires are scooping up, not least because of Mark Zuckerberg’s pivot away from the metaverse and towards artificial intelligence has reignited investors’ interest.
Billionaire hedge fund manager Stanley Druckenmiller is among those betting on Meta’s future. With AI at the forefront and a massive advertising platform, Meta may well be on the verge of a new growth phase.
The company is using AI to enhance its ad-targeting algorithms, creating better ROI for advertisers, which is likely to boost revenue in the long term.
It’s also launched Orion, a Google Glass-like product, that has reimagined spatial computing and is an attempt to disrupt Apple.
If successful, Meta has a massive global audience to sell to with over 3 billion active users across its platforms. This scale gives it a significant advantage in monetizing its AI and metaverse initiatives.
After a rough 2022, Meta’s stock has rebounded strongly, and many believe the worst is behind it, paving the way for long-term growth.
4. Amazon
From Ken Griffin’s Citadel Advisors to Warren Buffett’s Berkshire Hathaway, Amazon remains a top holding in many billionaires’ portfolios, but why?
What makes Amazon particularly compelling is the profitability of its cloud division, Amazon Web Services (AWS).
AWS has been a massive driver of Amazon’s profitability, and as businesses increasingly move to the cloud, AWS continues to see explosive growth. For example, AWS revenue grew by 12% in Q2 2024, and has established Amazon as the dominant leader in the cloud computing space.
Amazon’s e-commerce business also remains strong and when you combined it with investments in logistics, healthcare, and AI, Bezos’s firm is clearly positioning itself for the next decade of growth.
5. SoFi Technologies
Last but not least is SoFi Technologies, a smaller high-potential stock that has caught the attention of hedge fund managers like Dan Loeb of Third Point.
SoFi is attempting to disrupt traditional banking by offering a range of financial services through its digital platform, including loans, savings, and investing.
The company, once named Social Finance, recently received regulatory approval to become a national bank, which will allow it to offer more services and potentially boost profitability and its rapidly growing user base and strong revenue growth have made it a favorite among billionaires looking for the next big thing in fintech.
Why are they all in on SoFi? For one, the new bank charter allows it to offer more competitive interest rates and expand its product offerings, driving future growth.
And when you add to that the 584,000 new members in Q2 2024, bringing its total membership to 6.2 million as well as SoFi’s revenue growth of 37% year-over-year in Q2 2024, you can see there is a lot to like.
Wait and See, or Dive Right In?
These five stocks are at the top of billionaire portfolios for good reason: they’re leaders in their respective industries, and they all have enormous growth potential. Nvidia and Alphabet are set to dominate in AI, while Meta is expanding its digital empire through the metaverse. Amazon’s cloud business is a massive growth driver, and SoFi is poised to disrupt the fintech industry.
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