This article presents an overview of the 5 Best Hot Stocks To Buy Now. For a detailed overview, read 14 Best Hot Stocks To Buy Now.

5. Alphabet Inc Class C (NASDAQ:GOOG)

Number of Hedge Fund Investors: 163

Alphabet Inc Class C (NASDAQ:GOOG) has been trading a lot of hands lately, with an average trading volume over the past three months coming in at over 22 million. The stock is in the limelight after The Information reported Alphabet Inc Class C (NASDAQ:GOOG) is mulling a major restructuring of its ads sales unit as it plans to expand automation.

A total of 163 hedge funds had stakes in Alphabet Inc Class C (NASDAQ:GOOG) as of the end of the third quarter of 2023.

Diamond Hill Long-Short Fund made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2023 investor letter:

“On an individual holdings’ basis, top contributors to return in Q3 included long positions in KKR, Ciena Corporation and Alphabet. Shares of media and technology company Alphabet Inc. (NASDAQ:GOOG) rose in the quarter as its advertising and cloud businesses remain robust and the company delivered results ahead of market expectations. From a sector perspective, communication services also managed a positive Q3 (2%), riding the ongoing wave of positive mega-cap stocks’ performance, like Alphabet.”

4. NVIDIA Corp (NASDAQ:NVDA)

Number of Hedge Fund Investors: 180

NVIDIA Corp (NASDAQ:NVDA) is one of the hottest stocks right now and it is expected to remain on investors’ radar for months to come if not years, thanks to rising demand of NVIDIA Corp’s (NASDAQ:NVDA) chips used to power AI software systems.

Blue Tower Asset Management made the following comment about NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2023 investor letter:

“In addition to the use of larger datasets, the training speed of AI models has increased dramatically. NVIDIA Corporation (NASDAQ:NVDA)’s stock almost tripled in the first 3 quarters of this year with a 197% gain, and a large reason for this is the huge role they have played in recent AI improvements. Nvidia’s single GPU AI training speed performance has increased by a dramatic 1000x in 10 years with only 2.5x coming from Moore’s Law3 driven increases in chip density. Besides better chip manufacturing, there were three other improvement factors at play: simplifications in number representation for the weights of the neural networks, more complex mathematical instructions for reducing the computational overhead involved in mathematical calculations, and increased neuron sparsity (in neural networks, some neurons are useless and can be pruned from the network without reducing performance significantly). In addition to these single GPU improvements, Nvidia also made improvements in data center scale architecture that allows groups of GPUs to work more efficiently together.

It is noteworthy that the vast majority of the improvement came from hardware architectural and software data improvements, rather than transition density. These improvements were likely the low-hanging fruit of training speed improvements as researchers will eventually converge on an ideal architecture. The simplification of going from 32-bit to 8-bit floating point numbers for measuring weights is a one-time gain that can’t be repeated again. I expect the rate of improvement to slow down over the next ten years and eventually approach the levels of Moore’s Law improvements in chip efficiency. The historical trend for computer hardware is for it to eventually be commoditized, and I believe this will eventually occur for Nvidia’s GPUs as well.”

3. Meta Platforms Inc (NASDAQ:META)

Number of Hedge Fund Investors: 234

Analysts and hedge funds are bullish on Meta Platforms Inc (NASDAQ:META), thanks to the stunning turnaround Meta Platforms Inc (NASDAQ:META) posted earlier in the year due to its AI-related initiatives and an overall stronger usage growth on its platforms. Ronald Josey from Citi said Meta Platforms Inc (NASDAQ:META) is one of his top picks for 2024.

A total of 234 hedge funds tracked by Insider Monkey reported having stakes in Meta Platforms Inc (NASDAQ:META) as of the end of the September quarter. The most significant stakeholder of Meta Platforms Inc (NASDAQ:META) was Rajiv Jain’s GQG Partners which owns a $3.3 billion stake in Meta Platforms Inc (NASDAQ:META).

Blue Tower Asset Management made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q3 2023 investor letter:

“On February 24, 2023, Meta Platforms, Inc. (NASDAQ:META) released Llama, their LLM project, with the code being open-source but the training weights being kept proprietary. Nonetheless, within a week the training weights were leaked for the project. This release of the weights for 65 billion parameter model was a huge gift for open-source programmers to begin experimenting upon. Within weeks, other developers were creating innovations building on the model. There has been a race towards developing low-budget fine-tuning projects that can be trained for specific applications at the cost of a few hundred dollars in some cases. Some of these LLM projects can even be run on individual computers rather than data centers.

After the voluntary release of Llama’s architecture as open-source, the leak of the model weights ended up being a blessing in disguise for Meta. The innovation and improvements that followed were all built on Meta’s AI codebase. They were able to get these innovations without needing to pay any of the open-source developers for their efforts. This also demonstrates that the business advantage of the large tech companies is not in their models or AI codebase. Any innovations that the companies develop are unlikely to stay within the walls of the companies due to the mobility of researchers being poached between companies by recruiters. However, as these new model improvement technologies are made, the big tech companies have a scale advantage. They will be able to employ it into models that have more data, more compute budget, more parameters and therefore more intelligence in the resulting neural net.”

2. Amazon.com Inc (NASDAQ:AMZN)

Number of Hedge Fund Investors: 286

Monness, Crespi, Hardt analyst Brian White recently said in a note that Amazon.com Inc (NASDAQ:AMZN) is expected to benefit from tailwinds stemming from the “efficiency initiatives” it took in 2023 and “new opportunities” across its portfolio. The analyst also said Amazon.com Inc (NASDAQ:AMZN) shares could “dance to the beat” of higher holiday spending seen in 2023.

“In the end, we believe Amazon is well positioned to benefit from digital transformation, capitalize on the cloud, innovate with AI, participate in new healthcare-related opportunities, and leverage a leaner cost structure,” White added.

As of the end of the third quarter of 2023, 286 hedge funds tracked by Insider Monkey reported owning stakes in Amazon.com Inc (NASDAQ:AMZN).

Here is what White Brook Capital has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2023 investor letter:

“The magnificent seven, that underpin the S&P 500 performance, which includes Amazon.com, Inc. (NASDAQ:AMZN), now comprise almost 30% of the market capitalization of the S&P500. At least three of the seven stocks have heightened downside risk and suffer from already high penetration, weakening end markets, competitive risk, and lofty valuation. They have been remarkably resilient to increased interest rates and the potential for slowing growth.”

1. Microsoft Corp (NASDAQ:MSFT)

Number of Hedge Fund Investors: 306

Microsoft Corp (NASDAQ:MSFT) remains one of the hottest stocks of this year, thanks to the bull run that started with the AI-led boom in which Microsoft Corp (NASDAQ:MSFT) is a frontrunner due to its huge investments in OpenAI.

Microsoft Corp (NASDAQ:MSFT) is also the most popular stock among the 910 hedge funds tracked by Insider Monkey.

Here is what White Brook Capital has to say about Microsoft Corporation (NASDAQ:MSFT) in its Q3 2023 investor letter:

“The magnificent seven, that underpin the S&P 500 performance, which includes Microsoft Corporation (NASDAQ:MSFT), now comprise almost 30% of the market capitalization of the S&P500. At least three of the seven stocks have heightened downside risk and suffer from already high penetration, weakening end markets, competitive risk, and lofty valuation. They have been remarkably resilient to increased interest rates and the potential for slowing growth. Small and midcap stocks, on the other hand, have been systemically penalized by fears of recession and continue to price that eventuality even as significantly better outcomes have become more probable. Today, it’s relatively easy to find attractive investments in this segment.”

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. You can also look at the 14 Cheap DRIP Stocks To Buy Now and the 11 Best Rebound Stocks To Buy Now.