In this article, we are going to discuss the 10 best tech stocks to buy now according to billionaire Steve Cohen.
Founded by Steven A. Cohen, Point72 Asset Management is a global asset management company that makes investments across a range of asset classes and investment strategies. Point72 primarily makes significant quantitative and macro investments and discretionary long/short equity bets. The company has a main office in Stamford, Connecticut, and has linked offices in New York, London, Hong Kong, Tokyo, and Singapore. Top-down analysis is employed by Point72 Asset Management to carry out the capital allocation process and design policies and strategies. Additionally, the firm conducts multiple studies of the market condition in order to control the amount of risk in both individual portfolios and the firm as a whole. Point72 Asset Management has consistently produced great results for its stockholders, concluding 2021 with a 9.2% gain. In 2020, Cohen’s hedge fund added 16% to its value, maintaining its sound financial position.
Point72 Investors’ Portfolio
Point72 has 19 clients and $138.459 billion in discretionary assets under management according to Form ADV from 2022-08-03. Their most recent 13F filing showed managed 13F securities worth $23.7 billion, with the healthcare sector accounting for around 21.93% of the portfolio. The fund has a top 10 holdings concentration of 10.92%. During the second quarter of 2022, Point72 Asset Management executed a portfolio rebalance, with the investment hedge fund selling out 374 positions, reducing 292 investments and adding 614 new assets, and boosting exposure to 356 existing investments.
Our Methodology
We selected the top 10 tech holdings for Steve Cohen’s Point72 Asset Management for the second quarter of 2022. We’ve provided hedge fund sentiment using Insider Monkey’s database of almost 900 hedge funds to assist our readers in gauging each stock’s appeal to professional hedge funds.
10. Microsoft Corporation (NASDAQ:MSFT)
Point72 Asset Management’s Stake Value: $99.152 million
Percentage of Point72 Asset Management’s 13F Portfolio: 0.41%
Number of Hedge Fund Holders: 258
Hedge funds have been bullish on Microsoft Corporation (NASDAQ:MSFT) stock for the past few quarters, with 258 hedge funds holding a stake in MSFT as compared to 259 in the previous quarter. Fisher Asset Management is leading the table for Q2, holding 28.694 million MSFT shares worth roughly $7.36 billion. Microsoft 365 is the backbone of American businesses, ensuring the successful performance of crucial daily tasks and making Microsoft one of the most essential companies on earth. Google, which is Microsoft’s main rival in the market for productivity software, has a share of only around 10% as opposed to Microsoft Corporation’s 90% share.
Microsoft’s CFO Amy Hood just recently sold 75,351 shares of common stock on September 2 for a total transaction value of $19.55 million, according to a regulatory filing. The stock, however, has not witnessed much movement and has lost only 3.07% since the news broke.
09. Bill.com Holdings, Inc. (NYSE:BILL)
Point72 Asset Management’s Stake Value: $138.947 million
Percentage of Point72 Asset Management’s 13F Portfolio: 0.58%
Number of Hedge Fund Holders: 46
Bill.com Holdings, Inc. (NYSE:BILL) has lost almost 50% of its value in the past year and is struggling to report positive free cash flows. Hedge funds are losing interest in the stock as the number of hedge funds holding BILL shares has fallen in the past four quarters, from 66 in Q3, 2021 to 46 in Q2 of 2022.
On August 19, Bill.com Holdings, Inc. price target was raised by Wells Fargo analyst Jeff Cantwell from $200 to $230 while maintaining an Overweight rating for the stock. The analyst informs investors in a research note that the company’s Q4 results are demonstrating great operating momentum and exceeding investor expectations. Bill.com’s FY23 revenue projection, which indicates expected growth of 49% to 52%, was above the buy-side’s expectation, according to Cantwell.
08. Amazon.com, Inc. (NASDAQ:AMZN)
Point72 Asset Management’s Stake Value: $139.432 million
Percentage of Point72 Asset Management’s 13F Portfolio: 0.58%
Number of Hedge Fund Holders: 252
During Q2, Steve Cohen’s Point72 upped its stake in Amazon.com, Inc. (NASDAQ:AMZN) by 1401%, holding 1.312 million shares valued at $139.432 million. Amazon shares are down by roughly 47% from their highs last year and are back down to levels previously achieved in 2018. However, AMZN still has strong growth potential. It has five amazing businesses under one roof: AWS, Marketplace, Prime, Advertising, and Logistics. Given its focus on relentless innovation, and the tiny seeds it has recently planted, more dreamy businesses may soon follow.
Here is what Baron Funds specifically said about Amazon.com, Inc. in its Q2 2022 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest retailer and cloud services provider. Shares of Amazon declined 35% in the quarter due to weaker-than-expected profits resulting from an overcapacity of resources coming out of COVID. We expect Amazon to grow into its retail capacity in the quarters to come, which would enable it to improve profitability accordingly. Amazon remains one of our largest holdings due to its durable competitive advantages with a leading position in multiple trillion-dollar markets with a long runway for growth.
According to the U.S. Census Bureau, domestic e-commerce was only 14.3% of retail as of the first quarter of 2022. Internationally, the opportunity is even earlier as Amazon has still less than 2% market share of international retail spending. Its advertising share is roughly 3% and growing, underpinned by its structural closed loop, which enables accurate targeting and measurement.
Lastly, Amazon Web Services or AWS, remains the leading cloud provider, while cloud computing still represents only 9.5% out of the $4.3 trillion of global IT spending according to Gartner. Areas such as logistics and health care present additional optionality.”
07. Aptiv PLC (NYSE:APTV)
Point72 Asset Management’s Stake Value: $143.953 million
Percentage of Point72 Asset Management’s 13F Portfolio: 0.6%
Number of Hedge Fund Holders: 43
Founded in 1994 and situated in Dublin, Ireland, Aptiv PLC (NYSE:APTV) is an automotive technology supplier with a $27.5 billion market capitalization. Aptiv PLC had a -45.82% return since the beginning of the year, while its 12-month returns are down by 40.28%. The stock closed at $88.82 per share on September 06, 2022. A total of 43 hedge funds are holding a stake in APTV during Q2 as compared to 48 in the previous quarter. Point72 upped its stake in APTV by 210% during Q2 as compared to the previous quarter.
In its Q1 2022 investor letter, ClearBridge Investments mentioned Aptiv PLC and explained its insights for the company. Here is what the fund said:
“The acceleration in electrification of transport should support electric vehicle (EV)-related stocks like Aptiv (NYSE:APTV), which came under pressure in the quarter on concerns the auto cycle is past its peak. Aptiv provides a range of solutions for the auto industry, including autonomous driving technologies, safety technologies, components, and wiring. The large exposure of APTV to EVs should lead to long-term value as EVs continue their growth, boosted by their relative attractiveness as prices at the pump hit near-historic highs.”
06. Uber Technologies, Inc. (NYSE:UBER)
Point72 Asset Management’s Stake Value: $149.026 million
Percentage of Point72 Asset Management’s 13F Portfolio: 0.62%
Number of Hedge Fund Holders: 129
The ride-hailing business Uber Technologies, Inc. (NYSE:UBER) is based in San Francisco, California, and it also offers food and other delivery services. By 2040, the business wants to run an emission-free, all-electric platform. Point72 Asset Management, led by Steve Cohen, started holding 2.5 million shares of Uber Technologies, Inc. back in Q2 2019. As of Q2 2022, the hedge fund’s stake in the firm had grown to 7.2 million shares.
Since announcing strong earnings for Q2, Uber Technologies, Inc. stock has rallied this summer. On August 23, with a $37 price target, Wolfe Research analyst Deepak Mathivanan maintained an Outperform rating on Uber. Given its “significant runway” for profitability and free cash flow growth in the second half of the year and 2023, Uber Technologies, according to the analyst, is still one of the best mobility ideas for the second half of 2022. He still believes that Uber shares “offer an odd opportunity for investors searching for asymmetric themes (margin increase, cost savings, etc.) beyond macro sensitivity.” According to Mathivanan, the shares are currently priced at a “compelling valuation” for a potential 20% increase in sales and an expansion of the profit margin over the following three to five years.
05. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Point72 Asset Management’s Stake Value: $161.014 million
Percentage of Point72 Asset Management’s 13F Portfolio: 0.67%
Number of Hedge Fund Holders: 77
Steve Cohen’s Point72 upped its stake in CrowdStrike Holdings, Inc. (NASDAQ:CRWD) during Q2 by 603%, holding 955,234 shares as compared to 135,900 shares in the previous quarter. Chase Coleman and Feroz Dewan’s Tiger Global Management LLC is the largest shareholder of CRWD, holding 6.5 million of its shares worth roughly $1.10 billion. CRWD announced its Q2 results on August 30, reporting an EPS of $0.36 and revenue of $535.15 million, both above the market consensus.
On September 2, Peter Sazel, an analyst with Atlantic Equities, began covering CrowdStrike Holdings, Inc. with a Neutral rating and a $200 price target. In a research note, Sazel informs investors that the company benefits from a first-mover advantage and amassed data that may have produced a network effect and a “strong moat.”
04. Broadcom Inc. (NASDAQ:AVGO)
Point72 Asset Management’s Stake Value: $162.022 million
Percentage of Point72 Asset Management’s 13F Portfolio: 0.68%
Number of Hedge Fund Holders: 66
Point72 increased its stake in Broadcom Inc. (NASDAQ:AVGO) as well by 26%, holding 333,509 of its shares, valued $162.2 million. Ken Fisher’s Fisher Asset Management is the largest shareholder of AVGO, holding 1.47 million of its shares worth roughly $716.29 million. Broadcom Inc announced its latest quarterly earnings on September 1, reporting an EPS of $9.73, beating the market consensus by $0.18 and actual revenue of $8.46 billion, beating the estimate by $57.49 million. The company also generated $4.2 billion in free cash flow during the quarter, which smoothly covered its dividend payments of $1.7 billion. AVGO holds an 11-year track record of dividend growth. It pays a quarterly dividend of $4.10 per share, and its shares have a yield of 3.29%, as of September 7.
On September 2, William Stein, an analyst at Truist, decreased his price target for Broadcom from $658 to $630 while maintaining a Buy recommendation for the stock. Despite the recent unfavorable tech data points, the company had another fantastic quarter with above-consensus forecasts and excellent messaging surrounding the supply chain, the analyst tells investors in a research note. According to Stein, investors should purchase Broadcom stock because of its 3.3% dividend yield, his prediction of a 20% dividend increase this year, and the advantages of M&A.
03. Arista Networks, Inc. (NYSE:ANET)
Point72 Asset Management’s Stake Value: $177.227 million
Percentage of Point72 Asset Management’s 13F Portfolio: 0.74%
Number of Hedge Fund Holders: 48
Point72 added Arista Networks, Inc. (NYSE:ANET) to its portfolio during Q1, 2021, holding 96,000 of its shares, valued at $7.2 million. It currently holds 1.89 million shares of ANET worth roughly $177.2 million. Hedge funds are bullish on ANET, with the stock touching the peak of its popularity among the hedge funds tracked by Insider Monkey during Q2. The number of hedge funds holding ANET shares increased in the past three out of four quarters.
On August 24, Matthew Niknam of Deutsche Bank began coverage of the company with a Hold rating and a $135 price target. As the company increases market share in its primary markets for data center switching and cloud networks, the analyst predicts revenue growth of 18% annually through 2025. He bases the hold rating on value.
Artisan Mid Cap Fund, in its Q4 2021 investor letter, mentioned Arista Networks, Inc. and discussed its stance on the firm. Here is what the fund said:
“Arista Networks is the market leader for cloud networking equipment used in data centers for public, private and hybrid cloud deployments. The company’s top line growth has recently been bolstered by 400G deployments—the next generation of tech powering data centers—and further enterprise network penetration as customers migrate away from Cisco (~80% market share vs. ~5% for Arista). While the profit cycle is nicely in motion, we pared our exposure as shares began to approach our PMV estimate.”
02. ServiceNow, Inc. (NYSE:NOW)
Point72 Asset Management’s Stake Value: $179.716 million
Percentage of Point72 Asset Management’s 13F Portfolio: 0.75%
Number of Hedge Fund Holders: 99
Steve Cohen’s Point72 has been a shareholder of ServiceNow, Inc. (NYSE:NOW) since Q2, 2014. During this time, it sold its entire stake in the company several times. However, currently, it holds 377,936 ServiceNow shares, worth roughly $179.7 million.
With a Neutral rating and a $510 price target, Guggenheim analyst John DiFucci began covering ServiceNow, Inc. on August 11. ServiceNow, though “a very well-run firm,” will probably fall short of its long-term subscription revenue targets in 2024 and 2026, according to DiFucci.
Ensemble Capital recently published its 2022 Q2 investor letter. Here is what the fund specifically said about ServiceNow (NOW):
“ServiceNow is an enterprise software company that helps their corporate customers integrate all of their various software products into a unified platform. Their products are a key element of driving the digital transformation nearly every large company is undergoing. At the recent JP Morgan investor day, CEO Jamie Dimon explained that while the company could reduce expenses if needed should the economy slow, that their spending on digital transformation would continue as this spending was critical to the company managing costs and maximizing revenue over time. As an example of this type of spending, Dimon specifically pointed to ServiceNow, calling out that the company’s products now oversaw the single largest collection of JP Morgan data and highlighted that working with them had saved JP Morgan $50 million over the past few years.
While we have high expectations for ServiceNow’s long-term growth rate, at the company’s investor day in late May they offered an increased growth outlook for the next five years as they target even higher levels of growth than we have been expecting.”
01. Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Point72 Asset Management’s Stake Value: $189.103 million
Percentage of Point72 Asset Management’s 13F Portfolio: 0.79%
Number of Hedge Fund Holders: 66
During Q2, Point72 increased its stake in Take-Two Interactive Software, Inc. (NASDAQ:TTWO) by 735%, holding 1.54 million of its shares, valued at $189.1 million. TTWO touched the peak of its popularity among hedge funds tracked by Insider Monkey during the most recent quarter, with 66 hedge funds holding a stake in TTWO.
Take-Two Interactive Software, Inc. announced its latest quarterly earnings results on August 8, reporting an EPS of $0.74 and actual revenue of $1 billion, both below the market consensus. On September 6, while keeping a Buy rating on the shares, Truist analyst Matthew Thornton reduced his price target for Take-Two from $162 to $157.
Here is what Arch Capital has to say about Take-Two Interactive Software, Inc. in its Q4 2021 investor letter:
“Take-Two Interactive is an American video game publisher of franchises like Grand Theft Auto (GTA), Red Dead Redemption (RDR), and NBA 2K. It is currently one of the larger positions in the fund at an 8.3% allocation.
We are bullish on Take-Two because we believe the company has competitive advantages that will keep its franchises relevant for many years. First, its games have distinct network effects that keep it insulated from competitors. Multiplayer online games are only fun if others are also playing them, creating a winner-take-all effect that has specifically benefited GTA and NBA 2K over the last decade.
On top of network effects, Take-Two has decades of developmental expertise and over 5,000 developers across its divisions, giving it semi-strong economies of scale that insulate it from most competitors. Yes, large competitors like Microsoft or any mega-cap company could invest the dollars to get to this developer count, but it is impossible for a smaller studio to make games as immersive and at as quick of a pace as Take-Two does for its customers. They just don’t have the scale…” (Click here to see the full text)
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This article is originally published at Insider Monkey.
