In this article, we will take a look at the 10 Reddit stocks with biggest upside .
Rising inflation and persistent rate hikes have finally started to show their real effects. As inflation eats into the savings of millions of Americans, their ability to pile into stocks, which went through the roof after the pandemic and caused an unprecedented rise in meme stocks and overall retail investing space, is subsiding. Last month a Bloomberg report cited a survey from the American Association of Individual Investors. The survey showed that individual investors are on the retreat while institutional investors have been piling into stocks. Bearish sentiment took over bulls for the first time since June, according to the survey. According to the survey, investors with a bearish view of the stock market for the next six months jumped to 35.9%, while those with a bullish view fell to 32.3%.
The overall stock market performance in August remained dismal, which caused retail investors to flee the markets and pull out their funds. On the other hand, according to data from Bloomberg, courtesy of Bank of America, institutional investors and hedge funds bought $4.4 billion worth of shares in a single week in August, which was the largest inflow in two months among the clients of Bank of America.
The report said that while individual investors fled the markets, they remained excited about Nvidia and Apple, along with some other mainstream companies that have become very famous on Reddit.
However, chances are that individual investors will come back to the market once the doubts around the Fed’s future policy on inflation are cleared and inflation begins to recede. The Bloomberg report cited Citigroup Inc.’s Scott Chronert, who said that if S&P 500 falls to 4,200-4,300, an attractive entry point could be created for investors. The report also quoted HSBC Holdings Plc strategist Max Kettner, who said that he was awaiting a “renewed selloff to scale up the firm’s US equity exposure.”
Luis Louro / shutterstock.com
Our Methodology
For this article we conducted a broader-level survey of mainstream financial media and consulted over 10 credible financial websites to see which stocks popular on Reddit investing threads have the biggest upside potential. Most of these sources surveyed famous Reddit investing threads like Investing, WSB, Stocks, among many others, to see which stocks Redditors were piling into and then analyzed the best of these stocks.
Reddit Stocks with Biggest Upside
10. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 19
Chinese EV company NIO Inc. (NYSE:NIO)’s shares have lost about 50% in value over the past one year. But Redditors are still betting NIO Inc. (NYSE:NIO) would grow in the future. NIO Inc. (NYSE:NIO) recently jumped after the company posted strong delivery numbers for August. NIO Inc. (NYSE:NIO)’s deliveries in August 2023 saw an 81% rise on a year-over-year basis.
As of the end of the second quarter of 2023, 19 hedge funds tracked by Insider Monkey had stakes in NIO Inc. (NYSE:NIO). The most significant stakeholder of NIO Inc. (NYSE:NIO) during this period was Ray Dalio’s Bridgewater Associates which owns a $32 million stake in the company.
9. Chindata Group Holdings Limited (NASDAQ:CD)
Number of Hedge Fund Holders: 22
Data center solutions company Chindata Group Holdings Limited (NASDAQ:CD) ranks 9th in our list of the best Reddit stocks with upside.
As of the end of the second quarter of 2023, 22 hedge funds in Insider Monkey’s database of 910 hedge funds were long Chindata Group Holdings Limited (NASDAQ:CD).
In a latest earnings call Chindata Group Holdings Limited (NASDAQ:CD) talked about its future plans:
“…On the second half, there is going to be — we’re probably going to spend RMB4 billion or RMB6 billion further. I think — we think that this potential upside or increased spending will be a good news for everybody. Why it’s good news? Because this is driven by the progress of some incremental pipeline project, new project, which company is optimistic to obtain in the second half of this year.
And these pipeline projects may bring better revenue and EBITDA for future years. Not necessarily this year 2023, but future year in 2024 and ’25, beyond previous estimate. In addition, and a large — a significant portion of this incremental pipeline projects, again not the projects we have disclosed, these projects are actually driven by our overseas business. In other words, overseas projects will have a larger-than-expected shares and that basically means the increase of the unit CapEx accordingly. So obviously, the timing of the spending may vary around late 2023 or start of — beginning of 2024. So part of the $1.3 billion you saw in those privatization documents and a very small part of it, may be a carryover 2024 to spend. But on an aggregated level, if you combine 2023 and 2024 CapEx together, it should stay the same.”
Read the full earnings call transcript here.
8. C3.ai, Inc. (NYSE:AI)
Number of Hedge Fund Holders: 23
C3.ai, Inc. (NYSE:AI) is one of those stocks that saw huge gains earlier this year amid the AI boom. Many said most of the gains came on the back of speculations and due to the company having “ai” in its name. Recently, C3.ai, Inc. (NYSE:AI) said it won’t turn profitable until the fiscal fourth quarter of 2024. Wedbush Securities analyst Dan Ives lowered his price target to $42 from $50 for C3.ai, Inc. (NYSE:AI) but maintained an Outperform rating.
Ives believes increased spending in the near term would be an issue but he sees the “investment profile as near-term pain for long-term gain and speaks to the building pipeline c3 is seeing in the field.”
Hedge fund DE Shaw has over $32 million worth of PUT positions on C3.ai, Inc. (NYSE:AI) as of the end of the June quarter.
7. DTE Energy Company (NYSE:DTE)
Number of Hedge Fund Holders: 27
Detroit-based energy company DTE Energy Company (NYSE:DTE) ranks 7th in our list of the best Reddit stocks with upside potential. DTE Energy Company (NYSE:DTE) has lost about 24% in value over the past 12 months. Barclays recently published a bullish note on the broader utilities and power industry and named several stocks it likes in the space. Barclays likes DTE Energy Company (NYSE:DTE) due to regulatory de-risking through H2 2023.
As of the end of the second quarter of 2023, 27 hedge funds tracked by Insider Monkey had stakes in DTE Energy Company (NYSE:DTE).
DTE Energy Company (NYSE:DTE)’s management in second quarter earnings call talked about DTE’s guidance:
“Through the performance of our portfolio, we have plans to achieve the midpoint of our operating EPS guidance range for DTE and we’ll update the business unit guidance after the summer weather plays out. Our guidance does assume historically average weather for the remainder of the year without the normal contingency that we typically build into the plan. Our team has really made excellent progress identifying and implementing the opportunities in onetime O&M reductions across the company while ensuring the reliability and safety that our customers expect. This allows us to continue to deliver for all our stakeholders. The performance this year will allow us to continue to be very well positioned to achieve our long-term EPS growth and the premium returns that our shareholders have come to expect from us.”
Read the full earnings call transcript here.
6. Tesla Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 79
Tesla Inc. (NASDAQ:TSLA) remains one of the favorite stocks of Redditors. After all said and done, Tesla Inc. (NASDAQ:TSLA) remains a dominant player in an industry that is nowhere to go but up. Recently, Tesla Inc. (NASDAQ:TSLA) shares jumped after Morgan Stanley upgraded the stock. Morgan Stanley’s analyst Adam Jonas likes Tesla Inc. (NASDAQ:TSLA)’s AI potential on the back of the company’s much-hyped Dojo supercomputer. Jonas thinks the supercomputer could give a whopping $500 billion boost to Tesla Inc. (NASDAQ:TSLA)’s market cap as he thinks the system has the potential to open up new revenue streams, thanks to the adoption of robotaxis and software services.
As of the end of the second quarter of 2023, 79 hedge funds tracked by Insider Monkey reported owning stakes in Tesla Inc. (NASDAQ:TSLA). The biggest hedge fund stakeholder of Tesla Inc. (NASDAQ:TSLA) was Catherine D. Wood’s ARK Investment Management which owns a $1.3 billion stake in the company.
Baron Partners Fund made the following comment about Tesla, Inc. (NASDAQ:TSLA) in its Q2 2023 investor letter:
Many factors contributed to the strong performance of our largest Disruptive Growth position, Tesla, Inc. (NASDAQ:TSLA), in the period. Investors’ concerns regarding Tesla in 2022 continue to dissipate, and the company’s business has continued to grow materially, although at below peak margins. Tesla’s deliveries in China are recovering. The company’s newest factory in Texas has ramped production and should contribute to improved domestic sales and margins. U.S. government policies have lowered the cost to own Tesla vehicles, while also reducing the company’s battery production expenses.
We continue to believe that Tesla is only scratching the surface of its potential. We regard announced partnerships between Tesla and its competitors in the quarter as important. In early June, Tesla agreed to provide Ford Motors access to Tesla’s electric vehicle (EV) charging technology and network. Other traditional and pure EV manufacturers, including General Motors, Rivian, and Volvo, quickly followed suit. We expect additional charging partnerships to ensue. In our view, these relationships validate Tesla’s charging technology and infrastructure as superior to other standards. Consolidation around a single technology should accelerate charging infrastructure deployment, diminish the risk of Tesla’s technology becoming obsolete, and lessen a key concern of hesitant EV purchasers. EV adoption is at a tipping point. And Tesla, with its approximately 60% domestic market share of EVs, should be the most important beneficiary of this shift…” (Click here to read the full text)
5. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 112
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor giant that can become a significant competitor to NVIDIA Corporation (NASDAQ:NVDA) in the AI chips market in the future. Advanced Micro Devices, Inc. (NASDAQ:AMD) has a history of catching up quickly to its competition. Advanced Micro Devices, Inc. (NASDAQ:AMD) ranks 5th in our list of Reddit stocks with huge upside. Advanced Micro Devices, Inc. (NASDAQ:AMD) shares can also grow on the back of 5G catalysts.
L1 Capital International Fund made the following comment about Advanced Micro Devices, Inc. (NASDAQ:AMD) in its second quarter 2023 investor letter:
“During the June 2023 quarter the AI bubble continued to inflate. Advanced Micro Devices, Inc. (NASDAQ:AMD), as a key challenger to Nvidia, will benefit from increased demand for its next generation semiconductor chips. AMD’s share price is reflecting very bullish sentiment and the share price has run ahead of a reasonable base case valuation. Accordingly, we divested our entire position and moved AMD to our Bench.”
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 135
Apple Inc. (NASDAQ:AAPL) shares were not having a good time lately amid a Chinese ban on iPhones in government offices and a broader sentiment that the company’s new product event would be quieter and won’t create much buzz. The company has revealed the latest iPhone and only time would show the consumer response. Some analysts have also voiced concerns that Apple is a laggard in the AI race. But Apple Inc. (NASDAQ:AAPL) could be a great long-term stock pick and perhaps that’s why Redditors are excited about the stock.
Morgan Stanley analyst Erik Woodring, who has a $215 price target on Apple Inc. (NASDAQ:AAPL), recently said that he’s hopeful about the core iPhone product line of Apple.
“Despite concerns of a muted iPhone 15 cycle, we have conviction iPhone revs will grow [year-over-year in fiscal 2024] given a growing installed base, easy [year-over-year] comps, pent-up demand and positive mix shift driving ASP growth,” Woodring wrote in an investor note.
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 175
NVIDIA Corporation (NASDAQ:NVDA) remains one of the best stocks to buy according to Redditors. Despite huge gains NVIDIA Corporation (NASDAQ:NVDA) seems to have upside potential due to its dominance in the AI chips industry. Recently, it was reported that Samsung has gained the right to supply advanced memory chips to NVIDIA Corporation (NASDAQ:NVDA).
As of the end of the second quarter of 2023, 175 hedge funds tracked by Insider Monkey reported owning stakes in NVIDIA Corporation (NASDAQ:NVDA), up from 132 funds in the previous quarter. This shows the AI-led boom had smart money investors scramble to pile into NVIDIA Corporation (NASDAQ:NVDA) during the June quarter.
RiverPark Large Growth Fund made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2023 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA): NVDA shares were our next top contributor in reaction to blowout 1Q results and 2Q guidance. The company reported revenue of $7.2 billion and EPS of $1.09, 10% and 18% ahead of expectations. Revenue guidance for 2Q of $11 billion was 53% above expectations. The artificial intelligence arms race kicked-off by generative AI applications ChatGPT and Alphabet’s Bard has generated tremendous demand for Nvidia’s next generation graphic processors.
NVDA is the leading designer of graphics processing units (GPU’s) required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming-focused chip vendor to one of the largest semiconductor/software vendors in the world. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. Following 1Q’s strong results, Jensen Huang, founder and CEO of NVIDIA stated in the company’s press release, “[a] trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.”
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 225
Meta Platforms, Inc. (NASDAQ:META) has a strong upside potential due to several reasons. These include AI; its huge social reach via Facebook, Instagram, WhatsApp; and its AR/VR initiatives. The WSJ recently reported that Meta Platforms, Inc. (NASDAQ:META) is working on a powerful AI model to compete with GPT-4. Meta Platforms, Inc. (NASDAQ:META) aims to build a better model than its existing one called Llama.
As of the end of the second quarter of 2023, 225 hedge funds tracked by Insider Monkey reported owning stakes in Meta Platforms, Inc. (NASDAQ:META). The biggest stakeholder of Meta Platforms, Inc. (NASDAQ:META) during this period was Chase Coleman and Feroz Dewan’s Tiger Global Management LLC which owns a $2.5 billion stake in the company.
RiverPark Large Growth Fund made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q2 2023 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): META shares, continuing their rebound, were the top contributor for the second quarter. The company reported 1Q23 results, beating revenue expectations and lowering guidance for operating expenses and capital expenditures, while increasing revenue expectations.
META owns multiple social media platforms, each with more than one billion users, has an 80% gross margin, and generated $20 billion of FCF in 2022. Both its Facebook and its Instagram franchises have more than 2 billion Daily Active Users and generate the bulk of the company’s revenue. Recently, the company’s short form video offering, Reels, has gained mass user engagement and growing advertiser adoption, which we believe will return the company to strong revenue and free cash flow growth. After its advance, META shares trade at 19x Wall Street’s consensus estimates for 2024 EPS, estimates that we think could prove to be too low.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 278
Amazon.com, Inc. (NASDAQ:AMZN) is one of the best Reddit stocks with huge upside potential. Recently, Needham Securities called Amazon.com, Inc. (NASDAQ:AMZN) one of the top beneficiaries of the generative AI boom. AI developers are expected to turn to AWS services and applications that are offered for development and deployment of AI applications.
Amazon.com, Inc. (NASDAQ:AMZN) is one of the most popular stocks among the elite hedge funds tracked by Insider Monkey. As of the end of the second quarter of 2023, 278 hedge funds had stakes in Amazon.com, Inc. (NASDAQ:AMZN). The biggest stakeholder of Amazon.com, Inc. (NASDAQ:AMZN) was Natixis Global Asset Management’s Harris Associates which owns a $2 billion stake in the company.
Diamond Hill Large Cap Strategy made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2023 investor letter:
“Among our top contributors were insurance company American International Group (AIG), auto retailer CarMax and global online retailer Amazon.com, Inc. (NASDAQ:AMZN).
Amazon’s management team has been working to improve retail profitability, and Q1 results showed progress. In the case of Amazon’s web services (AWS), the market has shifted its focus from where growth will bottom in the near term to how AI can help accelerate the adoption of public cloud services in the future. We believe Amazon’s competitive advantages will continue to grow and that the business has the potential to grow faster than the overall economy in the coming years.”
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Disclosure: None. 10 Reddit Stocks with Biggest Upside is originally published on Insider Monkey.
