In this article we present the list of 12 Hot Stocks to Buy According to Hedge Funds.
Meta Platforms, Inc. (NASDAQ:META), Tesla, Inc. (NASDAQ:TSLA), and Salesforce, Inc. (NYSE:CRM) are some of the hottest stocks on the market this year, which is likely of little surprise to their bullish hedge fund shareholders, which own each of them in significant quantities.
Stocks are off to a strong start in 2023 as they look to rebound from an underwhelming 2021 and an even poorer 2022. The SPDR S&P 500 ETF Trust has gained 11.9% this year on the heels of 19.5% losses in 2022, while the NYSE is up a more modest 1.3% after 11.5% losses last year. The biggest winners though have been tech stocks, as the Nasdaq has soared by 26.9% year-to-date following a 33.1% decline in 2022.
That’s left no shortage of hot stocks to buy according to hedge funds, with several of their top 10 most popular stocks all delivering big returns this year, while the majority of stocks on this last, all of which have gained at least 30% in 2023, rank among their 30 most popular stocks. Unsurprisingly, tech stocks occupy most of the spots on this list, with AI being a key theme that is driving many of their results to new heights or expanding their capabilities in exciting ways.
To determine which hot stocks to buy according to hedge funds, you first need to know how to find out what hedge funds are buying. Insider Monkey specializes in exactly that, publishing dozens of articles quarterly on the latest hedge fund activity according to their most recent 13F filings with the SEC, in which hedge funds with more than $500 million in assets under management must disclose their holdings.
Insider Monkey also compiles the quarterly ownership data from a select group of 900+ top performing funds to create industry and other theme-specific lists of what stocks hedge funds are buying now, so investors can get a quick snapshot into how some of the brightest minds in the investment world feel about the prospects of companies compared to their rivals in various industries and sectors.
Critics sometimes point to the fact that any list of the hot stocks to buy according to hedge funds is already outdated by the time their holdings data becomes available, given that most hedge funds don’t disclose their holdings until the 13F filing deadline approximately six weeks after the date on which they’re reporting their holdings. However, given their general focus on long-term investing, this criticism is relatively unwarranted and makes them the ideal investors to piggyback for anyone who’s looking to build a portfolio of diversified assets with great long-term potential.
That’s not to say we don’t see significant swings in hedge fund ownership of certain stocks each quarter, as just a single event or earnings report can dramatically alter the long-term outlook for companies. In other cases, some of the hottest stocks to buy according to hedge funds see slight declines in ownership in the following quarter(s) simply because they’ve been doing so well and may have reached a valuation point that has surpassed the fair value estimates that some funds have on those stocks.
With all of that in mind, let’s check out 12 hot stocks to buy according to hedge funds, which have enriched their shareholders with at least 30% returns this year.
Photo by Sharon McCutcheon on Unsplash
Our Methodology
The following list of the hottest stocks to buy according to hedge funds are ranked based on hedge fund sentiment and include only the most popular stocks among hedge funds which have posted at least 30% gains year-to-date. We follow a select group of hedge funds because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q1 2023 reporting period.
12 Hot Stocks to Buy According to Hedge Funds
12. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Shareholders: 102
Year-to-Date Return (through June 5): 32.3%
Salesforce, Inc. (NYSE:CRM), Meta Platforms, Inc. (NASDAQ:META), and Tesla, Inc. (NASDAQ:TSLA) are a few of the hottest stocks buy according to hedge funds, who own large stakes in all of those high-performing stocks. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is another hot stock hedge funds love, having hit an all-time high in hedge fund ownership during Q1, topping 100 for the first time. The number of smart money TSM shareholders has more than doubled over the last four years. Lee Ainslie’s Maverick Capital and Stanley Druckenmiller’s Duquesne Capital were among the funds to add TSM to their 13F portfolios during Q1.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the first of several semiconductor stocks to make the list of hot stocks to buy according to hedge funds thanks to its dominant position in the high-performance chip market, where it currently controls close to a 90% share of the global market. As the demand for top-of-the-line chips intensifies in the coming years thanks to the expected robust growth in AI and cloud computing applications, Taiwan Semiconductor appears poised to continue its impressive growth and further grow its already-strong margins.
Wedgewood Partners likes Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s long-term growth outlook, as relayed in its Q1 2023 investor letter:
“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) contributed to performance as revenues grew +27% (in USD) from the year ago quarter. Despite this strength, the Company’s customers have seen near-term weakness in demand due to Covid-19 normalization as well as the launch timing of new products. However, the Company is well-positioned to continue a long-term growth trajectory because its leading-edge capacity is being absorbed by high-performance computing applications, particularly at nontraditional integrated circuit (IC) design houses, such as Apple, Alphabet and Amazon, which have become IC-design powerhouses over the past decade. Importantly, the Company’s aggressive investment in leading-edge equipment, tight development with fabless IC designers, and embrace of open development libraries, should continue to foster a superior competitive position and attractive long-term growth.”
11. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Shareholders: 73
Year-to-Date Return (through June 5): 34.5%
Micron Technology, Inc. (NASDAQ:MU) shares have rallied this year after a miserable 2022 that saw them lose 46% of their value. While they still have a ways to go to make up all of those losses, their 38.2% gains year-to-date have convinced several hedge funds to go long MU, including Rajiv Jain’s GQG Partners, which bought nearly 4.3 million MU shares in Q1.
Despite recently being banned in China when it comes to certain critical infrastructure projects and installations, Micron Technology, Inc. (NASDAQ:MU) shares have outperformed even TSM’s this year, gaining 35% year-to-date. According to Bernstein analyst Mark Li, the impact of the China ban should be relatively negligible for Micron in the grand scheme of things, as Micron’s enterprise segment accounts just 20% of overall revenue, with China’s portion of that likely accounting for as little as 2% of overall revenue.
Claret Asset Management noted that Micron Technology, Inc. (NASDAQ:MU) shares had lost nearly half their value through the first nine months of 2022 in the fund’s Q3 2022 investor letter:
“Inflation is still higher than interest rates… not an incentive to save for most people. Either inflation must come down or interest rates have to go up further. Or both. And probably both. Now that they are taking the punch bowl away and the party is over, what happens next? For whatever reason, the stock market seems to always precede the economic reality: Micron reached a high of $98.45 on January 5th, 2022 and is trading at $50.00 today.”
10. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Shareholders: 289
Year-to-Date Return (through June 5): 40.2%
Microsoft Corporation (NASDAQ:MSFT) is the most popular stock among hedge funds in terms of single-ticker ownership (Alphabet has more hedge fund shareholders combined between its two tickers) and it hasn’t disappointed smart money managers this year, returning 36% year-to-date. Unsurprisingly, The Bill & Melinda Gates Foundation Trust, managed by Michael Larson, is the largest MSFT shareholder with 39.3 million shares. Its 13F portfolio has 31% exposure to Microsoft.
Microsoft Corporation (NASDAQ:MSFT) is taking some intriguing steps to eat into Google’s search dominance, having recently integrated its own search engine Bing into the AI chatbot ChatGPT, a move that was facilitated by Microsoft’s earlier $13 billion investment in the AI platform’s creators, OpenAI. The tech giant is also gaining a strong foothold in the cloud computing space, as Azure is slowing gaining market share on Amazon’s AWS.
Alger Spectra Fund discussed the latest AI innovations at Microsoft Corporation (NASDAQ:MSFT) in its Q1 2023 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is a beneficiary of corporate America’s transformative digitization. Microsoft’s CEO expects technology spending as a percent of Gross Domestic Product (GDP) to jump from about 5% now to 10% in 10 years and that Microsoft will continue to capture market share within the technology sector. The company operates through three segments: Productivity and Business Processes (Office. LinkedIn, and Dynamics), Intelligent Cloud (Server Products and Cloud Services. Azure, and Enterprise Services), and More Personal Computing (Windows Devices, Gaming, and Search). While the company reported decent fiscal second quarter results, their investment in OpenAl’s ChatGPT captured the attention of investors. Contributing to positive performance. Throughout the quarter. Microsoft surprised investors with continual rollouts of new Al capabilities across the company’s portfolio (e.g., Bing, GitHub. Teams, Office 365). Furthermore, the company announced Microsoft 365 Copilot, which leverages GPT-4, a large language model, combined with the Microsoft Graph of data to provide Al virtual assistance. We believe Microsoft’s investment in OpenAl provides a first-mover advantage in the Al transformer model space. Despite challenges in the early days of Al-powered applications, the pace of Al innovation is faster than any other enterprise technology previously observed, in our view.”
9. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Shareholders: 204 (GOOGL)/155 (GOOG)
Year-to-Date Return (through June 5): 41.2%
Hedge fund ownership of Alphabet Inc. (NASDAQ:GOOG) peaked at the end of 2021 with nearly 400 long positions in the company’s class A and class C shares being held by hedge funds (some of which owned both classes). That was followed by a 6.9% drop in ownership during the first-half of 2022 and another slight dip in the first quarter of this year.
Considering the broad questions facing the long-term viability of Google Search in the age of AI, as outlined in the Microsoft writeup above, it’s perhaps somewhat surprising to see Alphabet Inc. (NASDAQ:GOOG) shares up 41% this year. That said, the effect of ChatGPT/Bing on Google Search’s market share has been negligible thus far. In fact, Google’s market share rose by 20 basis points to 92.8% in April compared to December 2022, when ChatGPT was first unleashed. And while Search undoubtedly remains the company’s bread-and-butter when it comes to ad revenue, it also has a strong cloud division that grew revenue by 28% in Q1, while YouTube remains the world’s dominant streaming platform with more than 2 billion monthly active users.
The Diamond Hill Large Cap Strategy detailed why Alphabet Inc. (NASDAQ:GOOG) was one of its strongest Q1 performers in the fund’s Q1 2023 investor letter:
“We did have several strong performing stocks this quarter. Our top contributors to return included NVR, Amazon, Alphabet Inc. (NASDAQ:GOOG), Microsoft and Booking Holdings, all of which posted double-digit gains. Shares of media and technology giant Alphabet outperformed as the company announced expense discipline while continuing to invest in its core products of Google Search, YouTube and Google Cloud.”
8. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Shareholders: 96
Year-to-Date Return (through June 5): 44.4%
Shares of SaaS workflow platform operator ServiceNow, Inc. (NYSE:NOW) have shot up by 38% in 2023 as the company continues to grow its business at an impressive rate. Hedge funds may be getting concerned about the stock’s valuation, as their ownership of NOW has ticked down slightly for three straight quarters, but it nonetheless remains one of the 30 most popular holdings among smart money managers.
ServiceNow, Inc. (NYSE:NOW) is also turning to AI to bolster the digital transformation suite of services that it offers clients, including recently launching an AI collaboration with NVIDIA Corporation (NASDAQ:NVDA), one of the hottest stocks on the planet in 2023 (look for it in the second half of this article). The company will use Nvidia’s software to train its own proprietary AI algorithms in how to better manage workflows and disrupt bottlenecks. ServiceNow is also well on the path to profitability, which has investors excited about the stock’s near-term and longer-term outlook.
The Polen Global Growth Strategy believes ServiceNow, Inc. (NYSE:NOW) can grow free cash flow at a greater than 20% annualized rate over the next three-to-five years, which it outlined in its Q4 2022 investor letter:
“ServiceNow, Inc. (NYSE:NOW) is an $80 billion market cap business based in California. Its purpose is to make the world of work, work better for people. Getting a job done in an enterprise (what the company refers to as “workflow”) usually requires different people in various functions of an organization to work together. Often, they rely on different technology systems and inefficient manual processes to complete each step of the job before moving on to the next.
ServiceNow believes the most effective digital transformation initiative utilizes tools that can integrate workflows across siloed systems, departments, processes, and people. The company is solving what is arguably the biggest pain point in the biggest profit pool in the world (enterprises). Consider the explosion in data growth and all the software point solutions emerging constantly. ServiceNow wrangles all this into a fully integrated dashboard on a global scale with global customers in every industry. Nearly 100% of revenues are subscription based with a 99% renewal rate, and the company currently has no direct competition, according to our research. ServiceNow started with IT workflow, and today, ~40% of net new annual contract value is in non-IT workflows. Through constant innovation, the business has continued to expand its total addressable market, and we think it can grow free cash flow (FCF) at a 20%+ annualized rate for the next three to five years. At less than 30x FCF, we thought the valuation was attractive.”
7. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Shareholders: 131
Year-to-Date Return (through June 5): 46.8%
Apple Inc. (NASDAQ:AAPL) is another prominent tech company that’s rallied in 2023, gaining over 38%. That’s great news for investing icon Warren Buffett, whose 13F portfolio has unprecedented exposure to the mobile tech giant at 46.4% as of March 13. Overall, there was a slight drop in hedge fund ownership of Apple during Q1.
Apple Inc. (NASDAQ:AAPL) shares slumped by 27% in 2022 but have quickly made up those losses this year, having pushed back near their all-time highs. While the iPhone still accounts for over 50% of Apple’s revenue, its higher-margin services segment continues to grow at an accelerated rate, hitting $20.9 billion in revenue during the company’s fiscal Q2 of 2023. That robust services segment also gives Apple an impressively high moat, as it keeps customers insulated within its own ecosystem, which is undoubtedly why Buffett is such a fan of the company.
RiverPark Large Growth Fund believes Apple Inc. (NASDAQ:AAPL) is still one of the most innovative and well-positioned mobile tech companies in the world, as it divulged in its Q1 2023 investor letter:
“Apple Inc. (NASDAQ:AAPL): Apple shares were our final top contributor for the quarter. While the company reported a rare quarterly earnings miss, investors had expected slower sales due to macro headwinds. Services continue to be a bright spot for the company with an all-time high of $21 billion in quarterly revenue, a 6% year-over-year increase, and management expects iPhone revenue growth to re-accelerate in 2Q. Operating Cash Flow was $34 billion for the quarter, and the company returned $23 billion to shareholders in the last three months, including $4 billion in dividends and $19 billion in share repurchases.
With an installed base of 2 billion active devices and significant growth of the company’s recurring revenue Services segment (now 18% of revenue), we believe that Apple remains one of the most innovative, best-positioned and most profitable companies in the mobile technology industry.”
6. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Shareholders: 72
Year-to-Date Return (through June 5): 49.2%
There was a 25% drop in hedge fund ownership of CrowdStrike Holdings, Inc. (NASDAQ:CRWD) during the final quarter of 2022 as investors worried about weakening demand for the company’s cybersecurity offerings. There was a slight 9% rebound in hedge fund positions in Q1, during which Crowdstrike posted promising Q4 results and boasted a record Q1 pipeline.
Closing out the first half of our list of hot stocks to buy according to hedge funds is CrowdStrike Holdings, Inc. (NASDAQ:CRWD), yet another company that has been successfully using AI, in this case to bolster the speed and efficiency of its cybersecurity solutions. CrowdStrike’s extensible platform has clearly struck a positive note with the majority of its clients, over 60% of which use at least five of the company’s modules. CrowdStrike isn’t overly profitable yet, but it is beginning to generate more free cash flow, a figure which could top $1 billion in the company’s current fiscal year.
Artisan Developing World Fund discussed CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s latest financial results in its Q1 2023 investor letter:
“Top contributors to performance for the quarter included graphics semiconductor company Nvidia, Southeast Asian e-commerce platform Sea, Latin American marketplace MercadoLibre, online travel marketplace Airbnb, and endpoint security company CrowdStrike Holdings, Inc. (NASDAQ:CRWD). CrowdStrike rebounded as its financial results eased demand-related concerns in its core endpoint business, while adoption in platform adjacencies continued to rise.”
Tesla, Inc. (NASDAQ:TSLA), Salesforce, Inc. (NYSE:CRM), and Meta Platforms, Inc. (NASDAQ:META) have performed even better than the aforementioned seven stocks this year, and are also highly regarded by world-class hedge funds. Check out all the details by clicking the link below.
5. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Shareholders: 136
Year-to-Date Return (through June 5): 55.7%
There was a 16% surge in the number of funds long Salesforce, Inc. (NYSE:CRM) during Q1 to hit an all-time high and elevating the stock into the top ten of hedge funds’ most popular stocks. Dan Loeb’s Third Point and Philippe Laffont’s Coatue Management were some of the leading hedge funds to add CRM to their 13F portfolios during the quarter.
If there’s been one clear trend among the hottest stocks to buy according to hedge funds, it’s been their deepening ties to AI, and that’s certainly the case with Salesforce, Inc. (NYSE:CRM), which has quickly applied generative AI capabilities to many of its product offerings, including Slack and Tableau, in addition to the forthcoming launch of Einstein GPT. Salesforce is also becoming more profitable even as it spends more money to improve its product offerings, hitting a non-GAAP operating margin of 27.6% in the company’s Q1 of fiscal 2024 ended April 30.
Vulcan Value Partners likes how quickly Salesforce, Inc. (NYSE:CRM) has ramped up its profitability according to the fund’s Q1 2023 investor letter:
Salesforce, Inc. (NYSE:CRM) was a material contributor during the quarter. The company has taken numerous positive steps to increase profitability more quickly than expected. Salesforce also improved its corporate governance by recommending three new board members. The company is focused on improving margins, deemphasizing acquisitions, and has expanded its stock buyback plan from $10 billion to $20 billion. We believe Salesforce can pursue these opportunities while continuing to increase its competitive position.
4. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Shareholders: 91
Year-to-Date Return (through June 5): 84.2%
Advanced Micro Devices, Inc. (NASDAQ:AMD) shares gained 50% in the first quarter and are having another strong second quarter to nearly double their value this year. Three semiconductor stocks cracked our list of the hottest stocks to buy according to hedge funds, and their most popular picks have also posted the biggest gains this year.
With Advanced Micro Devices, Inc. (NASDAQ:AMD), we’re now pushing into the first of four stocks that have delivered phenomenal returns so far in 2023. The chipmaker has fallen behind rival Nvidia in the AI race, but has scored a major victory on that front this year when it was announced last month that Microsoft is investing in and supporting the expansion of AMD’s AI chipmaking capabilities. AMD’s gaming segment also projects to be a strong growth driver for several years given it supplies all the chips for Sony’s PlayStation 5 and Microsoft’s Xbox Series X/S consoles, whose sales are projected to continue climbing over the next few years.
White Falcon Capital Management noted the market finally seems to understand how semiconductor-intensive AI is, which has helped to boost Advanced Micro Devices, Inc. (NASDAQ:AMD) shares this year according to the fund’s Q1 2023 investor letter:
“Last quarter we added Advanced Micro Devices, Inc. (NASDAQ:AMD) to the portfolio at 18x earnings and quickly made it into a top 5 position. At that time, Mr. Market was worried about earnings revisions for semiconductor stocks. In Q1 2023, it has been one of our best performing positions with the stock up 50%! In just three months, the market realized that Artificial Intelligence (AI) and related technologies require a lot of semiconductors. Mr. Market really is manic depressive but this volatility can give the enterprising investor just enough of a window to pick stocks with attractive risk rewards.”
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Shareholders: 82
Year-to-Date Return (through June 5): 104%
Following years of relatively muted hedge fund support, Tesla, Inc. (NASDAQ:TSLA) is now far and away the most popular automaker among the smart money. Billionaire money manager David Tepper added Tesla to Appaloosa Management’s 13F portfolio in Q1, while Cathie Wood’s ARK Investment Management raised its TSLA stake by 18% to 5.44 million shares.
Tesla, Inc. (NASDAQ:TSLA) shares have more than doubled this year as the company’s outlook is much improved compared to last year, when the stock crashed by 65%. CEO Elon Musk is back in the driver’s seat after finding a new CEO to take over Twitter, while the EV market has enjoyed explosive growth in the U.S., with sales rising by 65% last year. That’s significantly lowered concerns about how Tesla will fare in a rapidly intensifying competitive landscape. Tesla also topped deliveries estimates in Q1, with the Model Y being the world’s best-selling vehicle during the quarter.
The Aristotle Atlantic Focus Growth Strategy praised Tesla, Inc. (NASDAQ:TSLA)’s leading automotive profit margins in its Q1 2023 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) was a negative contributor to performance due to our underweight position relative to Russell 1000 Growth Index, as the company had strong performance in Q1. The strength occurred after the company partially reversed a previously announced price cut for its electric vehicles following a period of strong demand. Tesla also reported better-than-expected results for Q4 2022 during the first quarter.
Tesla Motors designs, develops, manufactures, and markets high-performance, technologically advanced electric cars and solar energy generation and energy storage products. Tesla sells more than five fully electric cars, among others, the Model X and Y SUVs, as well as the Model S sedan and Model 3 sedan. The company has a growing global network of Tesla Superchargers, which are industrial grade, high-speed vehicle chargers, typically placed along well-traveled routes and in and around dense city centers to allow Tesla owners quick and reliable charging. Tesla offers certain advanced driver assist systems under its Autopilot and Full Self-Driving options. US customers generate nearly half of Tesla’s sales.
We see Tesla as the leading manufacturer of battery powered electric vehicles (EVs). The company has achieved scaled production of EVs before the other large automobile manufacturers. The company’s technology in battery production and self-driving technology is more mature than competitors’ offerings. EVs are one of the fastest growing categories within automobile manufacturing. The profit margin in the automotive segment is significantly above automotive competitors which provides the company flexibility to price its vehicles more strategically as the competition eventually scales up their EV production. The direct-to-consumer sales model gives the company more control over its relationship with its customers as well as a source of higher profit margin since there is no dealership share of the profits.”
2. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Shareholders: 220
Year-to-Date Return (through June 5): 118%
Hedge funds have started buying back into Meta Platforms, Inc. (NASDAQ:META) after the social media giant’s stock crashed to a 7-year low late last year. Smart money ownership of META has risen by 18% over the past two quarters after cratering by 34% during the five quarters prior to that. Philippe Laffont’s Coatue Management more than doubled the size of its META position during Q1, giving it 8.06 million shares worth $1.71 billion on March 31.
Ranking second is another stock that’s been heavily downtrodden in recent quarters but has bounced back big time this year, Meta Platforms, Inc. (NASDAQ:META). It’s certainly easy to envision why investors were selling off META shares prior to this year, as the company’s tepid growth and the heightened competition from TikTok have cast doubts on Meta’s long-term outlook. There’s also the company’s money-losing metaverse initiative, which continues to burn through around $4 billion quarterly. Despite that, Meta Platforms is a money-making machine, generating over $18 billion in free cash flow last year, which has proven heavily enticing to investors as META shares have fallen to compelling valuations.
Artisan Value Fund discussed the favorable risk/reward profile for Meta Platforms, Inc. (NASDAQ:META) shares late last year in its Q1 2023 investor letter:
“Our top contributors in Q1 were Meta Platforms, Inc. (NASDAQ:META), Warner Bros Discovery (WBD) and FedEx. Following sharp declines in 2022, shares of Meta Platforms have more than doubled since their early November 2022 lows. Last year’s drawdown created a highly favorable risk-reward, which we took advantage of by adding to our position. Management has wisely, in our view, recalibrated its spending plans to focus on profitability amid a weaker advertising environment, increased TikTok competition and Apple’s privacy changes. While investors got ahead of themselves back in 2021, extrapolating pandemic growth rates into the future, Meta is still a highly successful enterprise generating over $120 billion of revenue annually on a run-rate basis and has more than $40 billion in cash on its balance sheet to help it navigate its future course. Recent usage and engagement trends for Facebook and Instagram have been positive, and Reels—Meta’s answer to TikTok—is gaining traction.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Shareholders: 132
Year-to-Date Return (through June 5): 174%
NVIDIA Corporation (NASDAQ:NVDA) has also been extremely popular among smart money managers during the past two quarters, with ownership of the semiconductor titan rising by 48% during that time. Those bulls have been rewarded with exceptional returns of 174% so far this year, making big winners out of funds like David Goel and Paul Ferri’s Matrix Capital Management, which had 20% 13F exposure to NVDA on March 31.
With AI being a strong theme in this article, it’s not surprising that NVIDIA Corporation (NASDAQ:NVDA)’s spectacular returns in 2023 have largely been driven by the overwhelming demand the company has reported for its chips in the use of AI-based applications. Nvidia is projecting $11 billion in revenue during the current quarter, which would smash its previous quarterly record by $2.7 billion. At the heart of that demand is data centers’ burgeoning need for chips to power generative AI and large language models according to CEO Colette Kress. The demand has pushed the company’s data centers visibility out several quarters, setting it up for not just a dominant quarter, but a tremendous finish to its fiscal 2024 year.
The Alger Spectra Fund is bullish on NVIDIA Corporation (NASDAQ:NVDA)’s long-term growth prospects, as detailed in its Q1 2023 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is a leading supplier of graphics processing units (GPUs) for a variety of end markets, such as gaming, PCs, data centers, virtual reality and high-performance computing. The company is leading in most secular growth categories in computing, and especially artificial intelligence and super-computing parallel processing techniques for solving complex computational problems. Simply put. Nvidia’s computational power is a critical enabler of Al and therefore critical to Al adoption, in our view. As such, we believe Nvidia is a long-term high unit volume growth opportunity. During the period, NVIDIA reported fiscal fourth-quarter results that met expectations, as the company navigated. through an inventory correction associated with the broad macroeconomic slowdown. Moreover, management gave fiscal year earnings guidance that was better than analyst estimates. noting strong year-over-year growth in gaming and data centers. Management’s constructive assessment of 2023 prospects. coupled with the rapid rollout and adoption of generative Al offerings, led to positive share price performance.”
Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below. For more of the latest stock picks worth considering for your portfolio, check out 15 Best Artificial Intelligence (AI) Stocks To Buy and 14 Best Healthcare Dividend Stocks to Buy.
Suggested articles:
- 25 Most LGBTQ-Friendly Countries in the World
- How to Become a Millionaire by Age 30: 12 Tips from Experts
- 20 Most Successful Shark Tank Products Ever In 2023
Disclosure: None. 12 Hot Stocks to Buy According to Hedge Funds is originally published at Insider Monkey.
