In this article, we will take a look at the most profitable mega cap stocks to buy.
In any economy, mega-cap or the largest companies act as the backbone of financial markets due to their strong fundamentals and dominant market positions. Small-cap stocks typically don’t offer what mega-cap stocks do—stable earnings, robust cash flow, and long-term resilience.
A report published by FactSet Insight on January 13, titled “2026 Outlook: Converging Forces Shaping Earnings, Capital Markets, Technology, and Global Policy,” highlights that the S&P 500 is expected to post double-digit earnings growth for the third consecutive year in CY26.
What’s interesting is that among the top 5 contributors to this growth, only two are “Magnificent 7” companies, with the remaining 493 companies forecasted to report earnings growth of 12.5% for the current year, the publication noted. That said, sectors projected to achieve double-digit growth include Information Technology, Materials, Industrials, Communication Services, and Consumer Discretionary.
If we consider profit margins, the forecasted net profit margin for the S&P 500 for this year is 13.9%, which is 2.9% higher than the 10-year average (annual) net profit margin of 11%. If this is achieved, it will be the peak (annual) net profit margin marked by the index since FactSet started tracking it in 2008.
With this backdrop, we have compiled a list of the most profitable mega cap stocks to buy. These stocks belong to a range of sectors, including communication services, technology, and financial services.
Image by MayoFi from Pixabay
Our Methodology
To compile our list of the 10 most profitable mega cap stocks to buy, we used the Stock Analysis screener to filter for mega cap stocks (over $200 billion in market cap) that reported operating and net profit margins over 20%. From this pool, we shortlisted the top 10 stocks with the highest trailing twelve-month (TTM) net income. These are then ranked in ascending order by net income. We also included data on hedge fund holdings in these companies based on Insider Monkey’s database, as of Q3 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Broadcom Inc. (NASDAQ:AVGO)
Net Income (TTM): $23.13 billion
Operating Margin (TTM): 31.76%
Number of Hedge Fund holdings: 183
On February 6, Cathie Wood’s ARK ETF posted the daily trades for the day, outlining a significant purchase of Broadcom Inc. (NASDAQ:AVGO) shares. Through the acquisition of 87,148 shares, ARK invested around $27 million in the company.
A day prior to this, Jefferies maintained its Buy rating and $500 price target on Broadcom Inc. (NASDAQ:AVGO), which translates to an upside potential of approximately 45%. The firm highlighted the company’s solid footing in the AI and networking space. While responding to concerns related to the company’s custom on-package (COT) business, Jefferies noted that Broadcom is “well ahead” of MediaTek on v8 chips, adding that the company will sustain this advantage with v9 chips in timing and capabilities.
According to the firm’s bottom-up model, Google will achieve 6 million total units in CY27, with 85-90% of that business tied to Broadcom Inc. (NASDAQ:AVGO). Jefferies believes that there is “room for that overall number to move up further.”
Broadcom Inc. (NASDAQ:AVGO), headquartered in Palo Alto, California, is a developer and supplier of semiconductor devices and infrastructure software solutions. Founded in 1961, the company operates in two segments: Semiconductor Solutions and Infrastructure Software.
9. Johnson & Johnson (NYSE:JNJ)
Net Income (TTM): $26.8 billion
Operating Margin (TTM): 22.99%
Number of Hedge Fund holdings: 103
On February 6, Johnson & Johnson (NYSE:JNJ) disclosed 12-month pilot-phase data from the OMNY-AF study, which examined the investigational OMNYPULSE Platform for the treatment of symptomatic paroxysmal atrial fibrillation (AFib). Announced during the 31st Annual AF Symposium in Boston, the results reveal that investigators achieved 100% acute procedural success with zero adverse events linked to the procedure.
As stated by Dinesh Sharma, M.D., Section Head of Cardiac Electrophysiology at the Naples Heart Institute,
“The 12-month data provide encouraging early evidence on the OMNY-AF study with promising safety outcomes – no procedure-related adverse events or MRI-detected cerebral lesions – across eight centers in the pilot phase.”
Earlier on February 3, RBC Capital increased the price target on Johnson & Johnson (NYSE:JNJ) to $255 from $240 and reiterated an Outperform rating following investor questions about the Daubert decision related to talc litigation and how it will impact the company financially.
According to the firm’s analysis, Johnson & Johnson (NYSE:JNJ) is unlikely to overturn the key consequences of the Daubert ruling, but the case may continue for years. Despite this, the firm remains confident in the healthcare giant’s financial position, given its strong performance, which helps reduce risk.
Johnson & Johnson (NYSE:JNJ) is a global healthcare company focused on innovative medicines and medical technologies. Headquartered in New Jersey, the company serves a wide clientele, including retailers, wholesalers, healthcare professionals, and hospitals.
8. Bank of America Corporation (NYSE:BAC)
Net Income (TTM): $29.06 billion
Operating Margin (TTM): 35.56%
Number of Hedge Fund holdings: 111
On February 9, JPMorgan slightly lifted the price target on Bank of America Corporation (NYSE:BAC) to $61.50 from $61 and maintained an Overweight rating. This revision is part of the adjustments in the large-cap bank space, as the market continues to project two rate cuts and long-term rates to “remain sticky with inflation concerns,” the firm highlighted. JPMorgan believes sector rotation, favorable economic trends, and stable fundamentals will weigh in on bank stocks.
Previously, on January 15, Truist Securities trimmed its price target on Bank of America Corporation (NYSE:BAC) to $60, down from $62, and maintained a Buy rating on the stock. This downward revision follows minor adjustments to the firm’s provision assumptions and projections, reflecting a lagging momentum in share repurchases.
That said, Truist Securities maintains its EPS guidance for the bank at $4.30 for 2026 and $4.95 for 2027. The firm’s model now forecasts 160 basis points of positive operating leverage within the year, lower than the bank’s own estimate of 200 basis points.
Bank of America Corporation (NYSE:BAC) is a North Carolina-based provider of various financial products and services. Founded in 1784, the bank operates through four segments: Consumer Banking, Global Wealth & Investment Management, Global Banking, and Global Markets.
7. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Net Income (TTM): $54.71 billion
Operating Margin (TTM): 53.84%
Number of Hedge Fund holdings: 194
On February 9, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) reported consolidated net revenue of NT$401.26 billion for January 2026, up 19.8% from December 2025 and 36.8% from January 2025. Additionally, the board of directors approved a cash dividend of NT$6.0 per share for Q4 2025.
Earlier on February 5, Reuters reported that Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is planning mass production of advanced 3-nanometre chips in Kumamoto, southern Japan. This announcement places Japan at the forefront of the production of top-notch 3-nanometre chips, which are utilized in both HPC and AI servers. These chips are set to be manufactured at the company’s second fab in Arizona next year. This acceleration in AI will help the company outperform its peers.
As stated by CEO C.C. Wei in Tokyo at a meeting with Japan’s Prime Minister Sanae Takaichi,
“We believe this fab will further contribute to the local economic growth and, most importantly, form a foundation for Japan’s AI business.”
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), founded in 1987, is a global foundry for integrated circuits and other semiconductor devices. The core offerings of this Taiwanese company include wafer fabrication processes, mask manufacturing, and engineering support services, among others.
6. JPMorgan Chase & Co. (NYSE:JPM)
Net Income (TTM): $55.68 billion
Operating Margin (TTM): 42.65%
Number of Hedge Fund holdings: 120
On February 3, Baird upgraded JPMorgan Chase & Co. (NYSE:JPM) to Neutral from Underperform and set a price target of $280. At the lowest 1-year price target, the firm’s estimate implies a 13.07% downside.
This upgrade comes after JPM’s weak performance, as shares have fallen 3.94% YTD in contrast to the KBW Bank Index’s 4% appreciation and the KBW Regional Banking Index’s 8% surge, the firm said. While noting JPMorgan Chase & Co. (NYSE:JPM)’s solid positioning in expanding market share, the firm highlighted that the company’s current valuation remains relatively expensive. Baird cited the company’s “enviable capital position,” which offers flexibility for both investment and capital returns.
To sum it up, the firm pointed out that although it does not advise including JPMorgan Chase & Co. (NYSE:JPM) shares at the current price, there is “less upside to maintaining a short position ahead of potential bank deregulation.”
Later on February 6, TheFly reported that HSBC upgraded JPMorgan Chase & Co. (NYSE:JPM) to Hold from Reduce, keeping a price target of $319. Slightly below the current price, the firm’s target translates to a downside potential of approximately 1%.
JPMorgan Chase & Co. (NYSE:JPM) is a New York-based financial services company operating through three segments: Consumer & Community Banking, Commercial & Investment Banking, and Asset & Wealth Management.
5. Meta Platforms, Inc. (NASDAQ:META)
Net Income (TTM): $60.46 billion
Operating Margin (TTM): 41.31%
Number of Hedge Fund holdings: 273
On February 9, Sachin Mittal, an analyst at DBS, reiterated a Buy rating on Meta Platforms, Inc. (NASDAQ:META) and set a $1,000 price target. This suggests an upside potential of nearly 48% from the current price.
On the same day, Reuters reported that Meta Platforms, Inc. (NASDAQ:META) reacted strongly to EU regulators following the antitrust charges on the company and warned to block rival AI tools on WhatsApp.
As stated by a Meta spokesperson in an email,
“The facts are that there is no reason for the EU to intervene in the WhatsApp Business API. There are many AI options and people can use them from app stores, operating systems, devices, websites, and industry partnerships.”
Later on February 10, Citizens maintained a Market Outperform rating and $900 price target on Meta Platforms, Inc. (NASDAQ:META), citing robust Instagram engagement momentum. Andrew Boone from Citizens notes that Instagram’s global time spent has accelerated by 18% YoY or faster for the last six months, with US time spent growth on Instagram alone increased by at least 16% over the same period.
Meta Platforms Inc. (NASDAQ:META) operates major social media services, including Facebook, Instagram, WhatsApp, Messenger, and Threads, as well as virtual reality products such as Oculus headsets.
4. NVIDIA Corporation (NASDAQ:NVDA)
Net Income (TTM): $99.2 billion
Operating Margin (TTM): 63.17%
Number of Hedge Fund holdings: 234
Since NVIDIA Corporation (NASDAQ:NVDA) CEO Jensen Huang’s appearance on CNBC’s “Halftime Report” on February 6, the stock has appreciated by nearly 11%. Huang believes the tech industry’s rising capex for AI infrastructure is both “appropriate” and “necessary” amid the industry’s “once in a generation infrastructure buildout.”
Huang further said that AI buildout has “seven to eight years to go” and highlighted that “AI is going to fundamentally change how we compute everything.”
″The reason for that is because all of these companies’ cash flows are going to start rising,” he added.
The day before, Goldman Sachs reaffirmed its Buy rating and $250 price target on NVIDIA Corporation (NASDAQ:NVDA). Consistent with the consensus estimate, the firm’s target implies an upside potential of 31.55% from the current price.
According to the bank, NVIDIA Corporation (NASDAQ:NVDA) will report a beat-and-raise quarter, thanks to favorable industry supply and demand indicators. From rising confidence in demand from non-traditional customers to sustained positive revisions to hyperscaler capex pushing into 2027, Goldman Sachs identified several growth drivers for the chipmaker.
NVIDIA Corporation (NASDAQ:NVDA) is a California-based computing infrastructure company that offers graphics, compute, and networking solutions. Incorporated in 1993, the company operates through two segments: Compute & Networking and Graphics.
3. Apple Inc. (NASDAQ:AAPL)
Net Income (TTM): $117.78 billion
Operating Margin (TTM): 35.37%
Number of Hedge Fund holdings: 166
On February 9, TheFly disclosed that Apple Inc. (NASDAQ:AAPL) iPhone 17e with MagSafe is launching “soon,” according to Bloomberg’s Mark Gurman report. The report added that the iOS 26.4 beta with updated Siri is expected in the week of February 23, with M5 MacBook Pros possibly arriving as early as the week of March 2.
Previously, on February 3, Goldman Sachs maintained its Buy rating and $330 price target on Apple Inc. (NASDAQ:AAPL), highlighting favorable App Store spending trends. The firm noted the company’s App Store spending acceleration of approximately 7% YoY in January 2026, relative to the 6% growth in December last year. While Entertainment grew 7% (from 3% to 10%), the Games division declined 3% YoY.
Goldman Sachs believes that App Store spending will continue to be a meaningful growth catalyst for the company’s Services revenue in the future. This positive outlook comes despite the risks of off-app payment adoption in the times ahead.
Apple Inc. (NASDAQ:AAPL) is a California-based giant that designs, manufactures, and markets electronic devices, including smartphones, personal computers, tablets, and wearables. Founded in 1976, the company offers iPhone, Mac, iPad, and AirPods, among others.
2. Microsoft Corporation (NASDAQ:MSFT)
Net Income (TTM): $119.26 billion
Operating Margin (TTM): 47.09%
Number of Hedge Fund holdings: 312
On February 10, Reuters reported that Microsoft Corporation (NASDAQ:MSFT) is considering utilizing superconducting power lines in its data centers. This would mean expansion of its huge U.S. build-out of the server warehouses by enhancing energy efficiency, the company said. This plan to develop giant data centers across the U.S. has been slowed by the national aging power system and electricity supply limitations.
“The technology helps us scale power density without expanding our physical footprint,” stated Husam Alissa, an executive at Microsoft’s CO+I CTO Office. “It can also help us reduce the size of power transmission infrastructure and lower community impact.”
Earlier on February 3, Piper Sandler maintained an Overweight rating and a $600 price target on Microsoft Corporation (NASDAQ:MSFT). The firm remains bullish on the company, given a supportive backdrop for hyperscalers and select vertical software companies. That said, Piper Sandler described the company as “perhaps the best pure-play on AI adoption today,” placing it among the firm’s top picks. The firm advises buying the stock following its post-earnings pullback.
Microsoft Corporation (NASDAQ:MSFT) is a global technology company that develops and sells a wide range of software, cloud services, devices, and business solutions, serving both individual users and enterprise customers worldwide. Its flagship products include Windows, Microsoft 365, Azure, LinkedIn, and Xbox.
1. Alphabet Inc. (NASDAQ:GOOGL)
Net Income (TTM): $132.17 billion
Operating Margin (TTM): 31.57%
Number of Hedge Fund holdings: 243
On February 9, Doug Anmuth, an analyst at J.P. Morgan, reiterated his Buy rating on Alphabet Inc. (NASDAQ:GOOGL) with a price target of $395. This reaffirmed price target reflects approximately 22% upside from the current price.
Three days earlier, KeyBanc Capital Markets lifted the price target on Alphabet Inc. (NASDAQ:GOOGL) to $370 from $360 and maintained an Overweight rating. In its analysis, the firm highlighted the company’s increased capex to back its growth in Google Services and Google Cloud businesses. Although concerns about the scale of investment exist, the giant demonstrates robust performance across its segments, KeyBanc noted.
According to the firm, Search expanded in 2025, and Cloud backlog surged nearly 55% QoQ in the fourth quarter, with Gemini, Alphabet’s AI assistant, achieving 750 million monthly active users. Alphabet Inc. (NASDAQ:GOOGL) is what KeyBanc Capital Markets describes as “more of a revisions than multiple expansion story,” noting that the rise in share price would be driven more by earnings growth than by valuation multiple expansion.
Alphabet Inc. (NASDAQ:GOOGL) is a global technology company that provides web-based search, consumer content, enterprise solutions, software engines, and advertising through its subsidiaries. Incorporated in 1998, the company’s segments include Google Services, Google Cloud, and Other Bets.
While we acknowledge the potential of GOOGL to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than GOOGL and that has 100x upside potential, check out our report about this cheapest AI stock.
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