In this article, we discuss 10 tech stocks to buy according to Jim Simons’ Renaissance Technologies.
Founded by billionaire Jim Simons in 1982, Renaissance Technologies is one of the most successful quant funds in the world. A quant fund determines investments based on mathematical models and algorithmic strategies. Renaissance Technologies has total assets under management (AUM) of $12.1 billion as of Q2 2022. Their last reported 13F filing for Q2 2022 included $8.4 billion in managed 13F securities and a top 10 holdings concentration of 10.97%.
Although the firm is having a difficult time this year navigating the increased market volatility brought on by the challenging macro-environment, the fund has a stellar record of generating substantial returns for investors over the years. Medallion, the firm’s flagship hedge fund, was so successful that the fund ejected outside investors in 2005 and now only manages the money of the firm’s employees.
Renaissance Technologies’ investments are largely focused on the healthcare, information technology, communication and energy sector, with tech companies Microsoft Corporation (NASDAQ:MSFT) and Meta Platforms, Inc. (NASDAQ:META) accounting for two of the top three 13F holdings of the fund as of Q2 2022.
Tech stocks have been under pressure this year in a rough macro-environment. The Nasdaq Composite index is down 23.50% this year which reflects a significant decline in tech stocks as investors dump risky assets amidst a rising interest rate environment and deteriorating consumer sentiment. The recent selloff since mid-August is a turnaround from two months earlier when tech companies led a comeback in the S&P 500 on optimism that inflation was easing and FED was near a pivot, a scenario that traders thought would allow the Fed to ease off on its aggressive interest rate rises. However, on Aug. 26, FED chairman Jerome Powell squelched the market’s euphoria by rejecting the notion that the Fed would soon change direction. If the market declines, stock prices of tech companies could fall even more given many are growth stocks that aren’t profitable yet.
The escalating tensions between U.S. and China have also posed a structural risk for many big tech companies in the U.S, which are heavily dependent on China in terms of manufacturing as well as a major geographic region for revenue contribution. One example of a tech company being at risk is Apple, Inc. (NASDAQ:AAPL), as China constitutes approximately 19% of the company’s revenues and is a key region when it comes to its manufacturing.
Although the outlook of tech stocks may appear grim, bear markets do provide a good opportunity for long-term investors to hand-pick stocks with strong business models and fair valuations. Tech stocks have high betas, and they suffer more than the larger market in a case of a bear market, but when the next economic cycle begins, and the bear market nears its end, it would be fair to say that tech stocks would be the ones to lead the rally.
Jim Simons of Renaissance Technologies
Our Methodology
For this list, we selected tech stocks from Renaissance Technologies’ 13F portfolio as of Q2 2022. The stocks are ranked according to the value of Renaissance Technologies’ stake in them from #10 to #1.
10 Tech Stocks to Buy According to Billionaire Jim Simons’ Renaissance Technologies
10. Activision Blizzard, Inc. (NASDAQ:ATVI)
Renaissance Technologies Stake Value: $418,661,000
Activision Blizzard, Inc. (NASDAQ:ATVI) was founded in 2008 by the merger of Activision, one of the world’s major console video game publishers, and Blizzard, one of the world’s largest P.C. video game publishers. Activision’s remarkable brand portfolio includes World of Warcraft, which has generated over $8 billion in total lifetime sales, and Call of Duty, which has sold over 175 million copies over the past 12 years.
Activision Blizzard, Inc. (NASDAQ:ATVI) reported Q2 2022 net revenues of $1.64 billion, decreasing 28% from the same period the year earlier. The major part of Activision’s net revenues was delivered by in-game purchases and subscriptions ($1.34 billion), while product sales brought the company $304 million. The company reported a normalized EPS of $0.47 for the quarter missing the consensus estimate by $0.01.
Renaissance Technologies Stake Value in Activision Blizzard, Inc. (NASDAQ:ATVI) at the end of Q2 2022 stood at $418,661,000, making the company rank 10th on our list of 10 Tech Stocks to Buy According to Billionaire Jim Simons’ Renaissance Technologies.
Earlier in the year, Microsoft Corporation (NASDAQ:MSFT) agreed to buy Activision Blizzard, Inc. (NASDAQ:ATVI) but the deal has yet to successfully close.
Alongside Apple, Inc. (NASDAQ:AAPL), Meta Platforms Inc. (NASDAQ:META), and Microsoft Corporation (NASDAQ:MSFT), Activision Blizzard, Inc. (NASDAQ:ATVI) is a major holding of Renaissance Technologies in Q2.
9. Shopify, Inc. (NASDAQ:SHOP)
Renaissance Technologies Stake Value: $438,508,000
Shopify, Inc. (NASDAQ:SHOP) provides an e-commerce platform to small and medium-sized enterprises. The company is divided into two segments: subscription solutions and merchant solutions.
Shopify, Inc. (NASDAQ:SHOP) grew revenues by 16% YoY in the previous quarter to $1.3 billion, driven by significant growth in the Merchant Solutions segment of the business. The company reported a normalized loss per share of $0.03 for the quarter as slowing consumer spending weighed on the company’s result.
Here is what Baron Fintech Fund has to say about Shopify Inc. (NYSE:SHOP) in its Q2 2022 investor letter:
“Shopify Inc. is a cloud-based software provider offering an operating system for multi-channel commerce. Shares fell due to continued post-pandemic e-commerce normalization as economies reopen, concerns about competition following Amazon’s announcement of Buy with Prime, as well as the broader selloff in growth stocks. We remain shareholders due to Shopify’s strong competitive positioning, innovative culture, and long runway for growth as it currently addresses less than 1% of global commerce spend.”
Renaissance Technologies Stake Value in Shopify, Inc. (NASDAQ:SHOP) at the end of Q2 2022 stood at $438,508,000, making the company rank 9th on our list of 10 Tech Stocks to Buy According to Billionaire Jim Simons’ Renaissance Technologies.
8. Atlassian Corporation Plc (NASDAQ:TEAM)
Renaissance Technologies Stake Value: $457,934,000
Atlassian Corporation Plc (NASDAQ:TEAM) develops software that enables teams to collaborate more efficiently. The firm offers project management software, communication tools, and I.T. help desk services. The company is located in Sydney, and was formed in 2002.
Atlassian Corporation Plc (NASDAQ:TEAM) reported Q4 2022 revenue of $760 million, increasing by 35.8% YoY on the back of strong growth in the cloud business. The company reported a normalized EPS of $0.27 for the quarter.
Renaissance Technologies Stake Value in Atlassian Corporation Plc (NASDAQ:TEAM) at the end of Q2 2022 stood at $457,934,000, making the company rank 8th on our list of 10 Tech Stocks to Buy According to Billionaire Jim Simons’ Renaissance Technologies.
7. Airbnb, Inc. (NASDAQ:ABNB)
Renaissance Technologies Stake Value: $499,255,000
Airbnb, Inc. (NASDAQ:ABNB) runs an online marketplace for vacation information and reservations. Through its websites and mobile applications, the company provides hotel, home-stay, and tourist services. Airbnb services customers globally.
Airbnb, Inc. (NASDAQ:ABNB) reported a record quarter in Q2 2022 with revenue of $2.1 billion, up 58% from the same period last year. The company reported a normalized EPS of $0.65, beating consensus estimate by $0.14 on the back of strong bookings in the quarter.
Here is what ClearBridge Investments had to say whilst discussing the prospects of Airbnb, Inc. (NASDAQ:ABNB) in its Q2 2022 investor letter:
“Airbnb is the leading online platform for alternative accommodations globally. We believe the company is well-positioned to capitalize on the large and growing market for travel and experiences, with the potential for growth in e-travel to be higher post-pandemic due to pent-up demand and increased work from anywhere flexibility. Airbnb is highly profitable today, though we see room for further margin expansion ahead. Furthermore, secular underpinnings to growth, a more variable cost structure and strong balance sheet should help the company drive better through-cycle performance as compared to its consumer discretionary peers.”
Renaissance Technologies Stake Value in Airbnb, Inc. (NASDAQ:ABNB) at the end of Q2 2022 stood at $499,255,000, making the company rank 7th on our list of 10 Tech Stocks to Buy According to Billionaire Jim Simons’ Renaissance Technologies.
6. Tesla Inc (NASDAQ:TSLA)
Renaissance Technologies Stake Value: $504,038,000
Tesla Inc (NASDAQ:TSLA), founded in 2003 and headquartered in Palo Alto, California, is a vertically integrated sustainable energy firm that also intends to convert the world to electric transportation by manufacturing electric automobiles. Tesla’s fleet includes luxury and midsize cars, as well as crossover SUVs. The business also intends to produce more inexpensive cars and small SUVs.
Tesla Inc (NASDAQ:TSLA) reported a strong result for Q2 2022 with $16.9 billion, increasing by 42.01% YoY. The company reported normalized EPS of $0.76 for the quarter beating the consensus estimate by $0.16.
Renaissance Technologies Stake Value in Tesla Inc (NASDAQ:TSLA) at the end of Q2 2022 stood at $504,038,000, making the company rank 6th on our list of 10 Tech Stocks to Buy According to Billionaire Jim Simons’ Renaissance Technologies.
In addition to Tesla Inc (NASDAQ:TSLA), Apple, Inc. (NASDAQ:AAPL), Meta Platforms Inc. (NASDAQ:META), and Microsoft Corporation (NASDAQ:MSFT) are also major holdings of Billionaire Jim Simons’ Renaissance Technologies at the end of Q2 2022.
5. Verisign, Inc. (NASDAQ:VRSN)
Renaissance Technologies Stake Value: $662,106,000
Verisign, Inc. (NASDAQ:VRSN) is the sole authorized registry for several generic top-level domains, including the widely utilized .com and .net top-level domains. The company operates critical Internet infrastructure to support the domain name system. In 2018, the company sold its Security Services unit signalling a renewed focus on the core registry business.
During Q2 2022 Verisign, Inc. (NASDAQ:VRSN) the company generated revenue of $352 million, up 6.8% from the same quarter last year. The company reported diluted earnings per share of $1.54 for the second quarter of 2022, compared to $1.31 for the same quarter of 2021.
Renaissance Technologies Stake Value in Verisign, Inc. (NASDAQ:VRSN) at the end of Q2 2022 stood at $662,106,000, making the company rank 5th on our list of 10 Tech Stocks to Buy According to Billionaire Jim Simons’ Renaissance Technologies.
4. Zoom Video Communications, Inc. (NASDAQ:ZM)
Renaissance Technologies Stake Value: $694,140,000
Zoom Video Communications, Inc. (NASDAQ:ZM) is a provider of communications technologies. The company provides a user-friendly communication platform and solutions for video meetings, phone conversations, whiteboarding, and annotation, allowing users to interact with anyone, anywhere.
For the second quarter of 2022, Zoom Video Communications, Inc. (NASDAQ:ZM) grew revenue by 8% YoY to $1.0 billion. The company also reported diluted earnings per share of $1.05, beating the consensus estimate by $0.12 as the company improved operating margins significantly during the quarter.
Renaissance Technologies Stake Value in Zoom Video Communications, Inc. (NASDAQ:ZM) at the end of Q2 2022 stood at $694,140,000, making the company rank 4th on our list of 10 Tech Stocks to Buy According to Billionaire Jim Simons’ Renaissance Technologies.
3. Apple, Inc. (NASDAQ:AAPL)
Renaissance Technologies Stake Value: $844,883,000
Apple, Inc. (NASDAQ:AAPL) develops a number of consumer electronic products, such as smartphones (iPhone), tablets (iPad), personal computers (Mac), smartwatches (Apple Watch), AirPods, and television set-top boxes (Apple T.V.), among others. The iPhone remains the primary source of income for Apple.
Apple reported another record June quarter with revenue of $82.9 billion, up 1.8% YoY, which was better than the company expected as the it faced supply chain constraints and a deteriorating macro environment during the quarter.
Wedgewood Partners mentioned Apple Inc. (NASDAQ:AAPL) in its second-quarter 2022 investor letter, Here is what the firm said:
“Apple Inc. (NASDAQ:AAPL) grew revenues +9%, driven by +17% growth in the Services segment. While iPhone revenues grew a modest +5%, it was on an exceptional year ago comparison of +66%. iPhone continues to capture most industry smartphone profits by focusing on high-end price tiers. Apple Inc. (NASDAQ:AAPL) is taking nearly two-thirds of the revenue share in the premium ($400 and above) smartphone segment. Further, most of the growth was driven by expansion in the “ultra-premium” price tier of $1000 or more per unit.[1] As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and software continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.”
Renaissance Technologies Stake Value in Apple, Inc. (NASDAQ:AAPL) at the end of Q2 2022 stood at $844,883,000, making the company rank 3rd on our list of 10 Tech Stocks to Buy According to Billionaire Jim Simons’ Renaissance Technologies.
2. Meta Platforms Inc. (NASDAQ:META)
Renaissance Technologies Stake Value: $884,482,000
With 2.5 billion monthly active members, Meta Platforms Inc. (NASDAQ:META) is the biggest online social network in the world. The company’s ecosystem primarily consists of the Facebook app, Instagram, Messenger, and WhatsApp, as well as numerous features surrounding these products. More than 90% of the company’s total income comes from advertising, with 50% coming from the United States and Canada and 25% from Europe.
During Q2 2022 Meta Platforms Inc. (NASDAQ:META) the company generated revenue of $28.8 billion, down 0.85% from the same quarter last year. The company reported diluted earnings per share of $2.46, missing the consensus estimate by $0.09.
Renaissance Technologies Stake Value in Meta Platforms Inc. (NASDAQ:META) at the end of Q2 2022 stood at $884,482,000, making the company rank 2nd on our list of 10 Tech Stocks to Buy According to Billionaire Jim Simons’ Renaissance Technologies.
1. Microsoft Corporation (NASDAQ:MSFT)
Renaissance Technologies Stake Value: $981,125,000
Microsoft Corporation (NASDAQ:MSFT) is a software corporation. The business provides apps, additional cloud storage, and innovative security solutions servicing clients globally
Microsoft Corporation (NASDAQ:MSFT) reported strong result for Q4 2022 reporting revenue of $51.9 billion, up 12% over the same period last year and normalized EPS of $2.23 for the quarter.
Renaissance Technologies Stake Value in Microsoft Corporation (NASDAQ:MSFT) at the end of Q2 2022 stood at $981,125,000 making the company rank 1st on our list of 10 Tech Stocks to Buy According to Billionaire Jim Simons’ Renaissance Technologies.
You can also take a look at 10 Best Dogs of the Dow to Invest In and 10 Electric Car Stocks to Buy for 2022.
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Disclosure: None. 10 Tech Stocks to Buy According to Billionaire Jim Simons’ Renaissance Technologies is originally published on Insider Monkey.
