In this article, we will take a detailed look at the 12 Best Tech Stocks To Buy According to Billionaire Ken Griffin.
Markets are off to a slow start in 2024 as investors go into a wait and see mode regarding the Fed’s plan of action for possible rate cuts this year. While the NASDAQ slid in the first few days of the year and some circles are voicing skepticism over the Magnificent Seven’s ability to carry forward the gains seen in 2023, long-term analysts believe technology stocks have more room to run in 2024. Part of the reason why many notable analysts are bullish on the technology sector is the power of AI and generative AI software’s benefits for common people.
Why Did Tech Stocks Decline in the Start of 2024?
Josh Brown, CEO at Ritholtz Wealth Management, recently talked on CNBC about the reason behind the decline in tech stocks in the first week of 2024. Brown said that there is a lot of profit-taking activity going on right now as investors saw remarkable returns from the technology sector in 2023, especially in the fourth quarter of the year. Brown said that as a wealth manager he can totally understand the logic of taking profits early in the year especially after such a spectacular rally. Brown, however, emphasized that the decline in tech stocks might look like these companies are “stumbling” but that is not the case.
Josh Brown also said that 2024 is the year when AI goes from “concept to product.” While he is not totally happy with their valuations, Alphabet and Amazon are the top two tech stocks to own according to Brown because of their AI catalysts.
Wise investors know that a decline in stocks for a week or two or even a few months for that matter means nothing when seen in the long run. Tech companies working on products and services that impact millions of people around the world with strong balance sheets are expected to keep gaining momentum in the months and years to come. That’s why many analysts and money managers are piling into these stocks.
In this backdrop, we decided to take a look at some of the top technology stock picks of billionaire Ken Griffin.
Ken Griffin of Citadel Investment Group
Methodology
For this article we scanned Ken Griffin‘s hedge fund Citadel LLC’s 13F portfolio for the third quarter of 2023 and picked the fund’s top 12 technology stock picks. Some notable names in the list include NVIDIA Corp (NASDAQ:NVDA), Microsoft Corp (NASDAQ:MSFT) and Apple Inc (NASDAQ:AAPL).
12. Uber Technologies Inc (NYSE:UBER)
Ken Griffin’s Stake: $319M
Ken Griffin’s Citadel decreased its stake in ride-sharing platform company Uber Technologies Inc (NYSE:UBER) by 11% in the third quarter. The fund still owns a $319 million stake in Uber Technologies Inc.
Citi analyst Ronald Josey added Uber Technologies Inc to his top picks for 2024. Here is what the analyst said about these companies:
“Underlying these themes are companies that, in our view, are stronger than they were a year ago. Most have gone through cost reductions and optimizations themselves resulting in sustainable margin expansion and stronger overall balance sheets.”
RiverPark Advisors made the following comment about Uber Technologies, Inc. in its Q3 2023 investor letter:
“Uber Technologies, Inc. (NYSE:UBER): UBER was the top contributor in the quarter following a better-than-expected 2Q23 earnings report and 3Q23 guidance. Gross bookings of $33.6 billion were up 16% year over year. Mobility gross bookings of $17 billion grew 25% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $16 billion were up 12% from last year. 2Q Adjusted EBITDA of $916 million, up $552 million year over year, significantly beat Street estimates of $845 million and the company generated $1.1 billion of free cash flow. Management guided to continuing growth in 3Q Gross Bookings (17%-20% growth) and Adjusted EBITDA (of $975-1,025 million).
UBER remains the undisputed global leader in ride sharing, with a greater than 50% share in every major region in which it operates. The company is also a leader in food delivery, where it is number one or two in the more than 25 countries in which it operates. Moreover, after a history of losses, the company is now profitable, delivering expanding margins and substantial free cash flow. We view UBER as more than just ride sharing and food delivery, but also as a global mobility platform with the ability to sell to its 130 million users (by comparison, Amazon Prime has 200 million members) and penetrate new markets of on-demand services, such as package and grocery delivery, travel, and worker staffing for shift work. Given its $4.3 billion of unrestricted cash and $4.4 billion of investments, the company’s enterprise value of $95 billion equates to just over 20x next year’s estimated free cash flow.”
11. AT&T Inc. (NYSE:T)
Ken Griffin’s Stake: $319M
AT&T Inc. Inc. ranks 11th in our list of the best tech stocks to buy according to billionaire Ken Griffin. Griffin’s fund increased its stake in AT&T Inc. by 182% in the third quarter, ending the quarter with a $319 million stake in AT&T Inc..
As of the end of the third quarter of 2023, 52 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in AT&T Inc..
Miller Value Income Strategy made the following comment about AT&T Inc. in its Q3 2023 investor letter:
“Our third-largest holding at quarter end was AT&T Inc. (NYSE:T), a leading provider of communications and connectivity services in the US. At $15/share, the stock trades at the same price it did almost thirty years ago. The share price is much less interesting to us in relation to where it has traded in the past than in relation to how much cash the company generates and what management is doing with it. At just over 6x earnings, the stock trades near its lowest price-to-earnings (P/E) multiple ever, also representing close to its largest-ever P/E discount to the stock market. The business converts most of its earnings to free cash flow, implying a forward free cash flow yield north of 15%. Just under half of free cash flow is going toward the dividend (7.5% yield), while much of the balance is going to debt paydown. In other words, if the stock does not fall below its lowest-ever valuation, investors clip a rock-solid 7.5% in cash, while owning a growing portion of a very steady business as management reduces debt outstanding. A discounted cash flow model will suggest that intrinsic value for shares begins with a “2,” suggesting the stock is undervalued on an absolute basis. The lack of volatility in the underlying fundamentals also makes it unique when compared to many other things we own, which reduces the probability of permanent capital impairment and argues for a significant weight in the portfolio.
AT&T looks particularly attractive when compared to some of the larger names dominating the S&P 500. Compare the stock to Apple, for instance, whose revenues and profits are likely to shrink this year, even as it trades at 29x this year’s earnings estimate. The ongoing return to rationality and capital accountability, along with extreme valuations in the megacap tech stocks, have us more excited about our portfolio’s prospects than we can remember for quite some time. As always, we remain the largest investors and welcome any questions or comments.”
10. Meta Platforms Inc (NASDAQ:META)
Ken Griffin’s Stake: $324M
Even though Ken Griffin’s hedge fund cut its stake in social media platform company Meta Platforms Inc (NASDAQ:META) by a whopping 53% in the third quarter, the fund still ended the period with a $324 million stake in Meta Platforms Inc.
Overall, Meta Platforms Inc is enjoying a bullish view from analysts and hedge funds since Meta Platforms Inc successfully executed cost cutting and integrated AI in its products that led to huge usage growth.
Like Meta, hedge funds are also buying NVIDIA Corp, Microsoft Corp and Apple Inc.
Blue Tower Asset Management made the following comment about Meta Platforms, Inc. 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.”
9. Dell Technologies Inc (NYSE:DELL)
Ken Griffin’s Stake: $355M
Dell Technologies Inc (NYSE:DELL) ranks 9th in our list of the best tech stocks to buy according to billionaire Ken Griffin. Citadel sold 818,057 shares of Dell Technologies Inc during the third quarter. But the fund still owns a $355 million stake in Dell Technologies Inc.
Recently, Citi opened a 90-day catalyst watch on Dell Technologies (NYSE:DELL) and HP (NYSE:HPQ) amid a bullish outlook of demand in the PC market.
8. Booking Holdings Inc (NASDAQ:BKNG)
Ken Griffin’s Stake: $399M
Ken Griffin’s hedge fund bought 122,566 more Booking Holdings Inc (NASDAQ:BKNG) shares during the third quarter, increasing its stake in the travel platform company to $399 million. The company is one of the best tech stocks to buy according to Ken Griffin.
As of the end of the third quarter of 2023, 81 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Booking Holdings Inc. The biggest hedge fund stakeholder of Booking Holdings Inc was Ken Fisher’s Fisher Asset Management which owns a $1.1 billion stake in Booking Holdings Inc.
In November, Booking Holdings Inc posted Q3 results. Adjusted EPS in the period came in at $72.32, beating estimates by $4.40. Revenue in the quarter increased by about 21.3% year over year to $7.34 billion, beating estimates by $80 million.
L1 Capital International Fund made the following comment about Booking Holdings Inc. in its Q3 2023 investor letter:
“Following significant under-performance, some high-quality businesses in these sectors are now becoming more attractive from a valuation perspective – in our language they are now getting warmer on our Bench of potential investments.
Our ‘all-weather’ portfolio centred around our unique definition of ‘quality’ delivered strong performance in the September quarter. Three companies positively contributed over 0.5% (in Australian dollars) to the Fund’s returns for the quarter (Booking Holdings Inc. (NASDAQ:BKNG), Intuit and Natural Resource Partners, in alphabetical order), and another three companies almost reached this level of positive contribution. No companies detracted from the Portfolio’s returns by 0.5% or more.
As part of our travels during the quarter (see page 6) we had the opportunity to meet with management of both Booking Holdings and Intuit. We continue to view both companies as exceptionally well managed.
Booking Holdings, the world’s leading online travel agency, continues to benefit from a strong global travel environment with particular strength in Europe, Booking Holdings’ core market. Fears of peak ‘revenge travel’ following COVID-19 lockdowns have been misplaced in our view. We assess current travel volumes to be only slightly elevated compared to pre-COVID-19 trends, with some regions, particularly outbound travel from China, still relatively depressed. Anyone who has travelled anywhere recently will be nodding when we say hotel rates have increased meaningfully in recent times. Accommodation providers are generally doing quite well, but the increased hotel rates have been necessary to offset inflation in costs such as employee salaries and additional cleaning services. As Booking Holdings ‘clips the ticket’ of accommodation spend, the company has benefitted from increased average daily hotel rates. Importantly, Booking Holdings continues to invest in its business, improving the reach, quality and range of services it provides, resulting in gains in market share and an extension of its industry leadership position. Booking Holdings is now more fairly valued by the market, but still provides attractive base case risk-adjusted returns and remains one of the larger investments in the Fund.”
7. Micron Technology Inc (NASDAQ:MU)
Ken Griffin’s Stake: $552M
Micron Technology Inc (NASDAQ:MU) is one of the best technology stocks to buy according to billionaire Ken Griffin. UBS recently called Micron Technology Inc one of its top semiconductor picks for 2024.
“Even after this rally into year-end, we would remain overweight semis in 2024 as inventory has peaked and started converting to revenue,” UBS’s Timothy Arcuri said.
6. Palo Alto Networks Inc (NASDAQ:PANW)
Ken Griffin’s Stake: $563M
Cybersec company Palo Alto Networks Inc (NASDAQ:PANW) ranks 6th in our list of the best tech stocks to buy according to billionaire Ken Griffin. Citadel had a $563 million stake in Palo Alto Networks Inc as of the end of September.
Recently, Raymond James downgraded Palo Alto Networks Inc stock to Market Perform from Outperform amid valuation concerns.
“To be clear, Palo Alto Networks is a great company, technology leader, execution has been stellar, and [Raymond James] doesn’t fight investors that have a time horizon longer than its 12-month mandate. However, [Raymond James] believes the risk/reward in the stock is becoming less favorable,” Raymond James said.
TimesSquare Capital U.S. Mid Cap Growth Strategy made the following comment about Palo Alto Networks, Inc. in its Q3 2023 investor letter:
“Across the Information Technology universe, we seek companies possessing differentiated capabilities, products, and services. Palo Alto Networks, Inc. (NASDAQ:PANW) supplies network and cloud-based security solutions to enterprises, service providers, and government entities. The latest quarter was mixed with the company falling shy versus the Street on billings, in line for revenues, and outpacing earnings. Palo Alto’s updated guidance was materially ahead of lowered Street expectations. Nevertheless, its shares pulled back by -8%.”
Like NVIDIA Corp, Microsoft Corp and Apple Inc, Palo Alto is one of the stocks hedge funds are buying.
5. T-Mobile Us Inc (NASDAQ:TMUS)
Ken Griffin’s Stake: $563M
Citadel decreased its take in T-Mobile Us Inc (NASDAQ:TMUS) by 34% in the third quarter, concluding the period with a $563 million stake in T-Mobile Us Inc.
A total of 79 hedge funds tracked by Insider Monkey had stakes in T-Mobile Us Inc as of the end of the September quarter.
ClearBridge Dividend Strategy made the following comment about T-Mobile US, Inc. in its Q3 2023 investor letter:
“During the quarter we initiated positions in two new names: T-Mobile US, Inc. (NASDAQ:TMUS) and Gilead Sciences. T-Mobile is the best-in-class player in the wireless space, delivering the strongest growth with the lowest cost structure and the best consumer proposition. T-Mobile’s strength is rooted in its advantaged competitive position. Its superior spectrum holdings enable it to provide better wireless service at meaningfully lower cost. T-Mobile’s annual capital expenditures run about $10 billion, on the order of half the amount its peers must spend. Due to its lower cost structure, T-Mobile can undercut its competitors on price while still generating compelling profitability and returns.
This combination — superior service at lower prices — has enabled T-Mobile to outgrow its competition. In the three years since completing its merger with Sprint, T-Mobile has grown its post-paid subscriber base by about 22%. Over the same period, AT&T’s has grown by about 14%, while Verizon’s by less than 5%.
Given the high fixed-cost nature of the wireless business, these steady increases in revenue growth have led to outsize increases in profits and free cash flow. Free cash flow in 2023 is expected to come in around $13.5 billion, up from less than $8 billion last year. In 2024 free cash flow is expected to grow by over 20% to approximately $17 billion — providing a 10% yield based on today’s stock price.
We have long admired T-Mobile, but until recently the stock did not pay a dividend. The company announced its inaugural dividend in September, and we bought the stock shortly thereafter. The initial yield is about 2% and it is expected to grow about 10% per year.”
4. Adobe Inc (NASDAQ:ADBE)
Ken Griffin’s Stake: $607M
Adobe Inc (NASDAQ:ADBE) ranks 4th in our list of the best tech stocks to buy according to billionaire Ken Griffin. As of the end of the September quarter, Citadel reported owning a $607 million stake in the design tools company.
Here is what Polen Global Growth has to say about Adobe Inc. in its Q3 2023 investor letter:
“Both Alphabet and Adobe’s businesses continue to perform well. With respect to Adobe, the most recent quarter delivered more of the same with constant currency revenue growing 13%, margin expansion, and over 2% of shares outstanding repurchased for non-GAAP earnings growth of over 20%. We believe its approach to GenAI through Firefly, which guarantees safe content because it trains on Adobe Stock, will continue to be attractive to enterprises. The counter to GenAI, and something we are keeping an eye on with Alphabet and Adobe, is that it requires heavy investment. While both businesses can leverage their scale and manage costs in other areas, we expect the investment in future growth through GenAI will weigh on company-wide margins over the near term.”
3. Apple Inc (NASDAQ:AAPL)
Ken Griffin’s Stake: $719M
Billionaire Ken Griffin loaded up on a whopping 3,381,231 more Apple Inc shares during the September quarter, boosting his stake in Apple Inc to a massive $719 million.
Apple Inc shares were in the spotlight on December 22 after the company halted Apple Watch sales due to a patent dispute.
Wedbush’s Dan Ives recently said he believes Apple Inc could hit $4 trillion in market cap in 2024.
Hayden Capital made the following comment about Apple Inc. in its third 2023 investor letter:
“Even Berkshire Hathaway’s most famous investment of the last decade – Apple Inc. (NASDAQ:AAPL) – was based on a similar set up. When Berkshire invested in 2016, Apple’s subscription revenues were just starting to cross ~10% of total revenues. Today, that figure is ~25%.
While operating income has grown +90% from 2016 to 2023, the valuation multiple itself has expanded by ~300%, from ~6x EV/EBIT to ~24x EV/EBIT today.
Investors have evolved their perception of Apple’s products – from that of a “fad” hardware company at risk of competition, to that of a “consumer staple”, a necessary part of a household’s budget…” (Click here to read the full text)
2. NVIDIA Corp (NASDAQ:NVDA)
Ken Griffin’s Stake: $893M
Billionaire Ken Griffin’s Citadel owns an $893 million stake in NVIDIA Corp. The stock has gained about 243% year to date through December 22. Edgewater Research recently said it has seen “mixed” datapoints for NVIDIA Corp’s GPU demand for the first time in 2023
“Primary customer concern appears pricing; [Nvidia] viewed as likely needing to be more price flexible due to the mandate downgrade in performance,” Edgewater wrote.
As of the end of the September quarter, 180 hedge funds tracked by Insider Monkey had stakes in NVIDIA Corp.
Blue Tower Asset Management made the following comment about NVIDIA Corporation 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.”
1. Microsoft Corp (NASDAQ:MSFT)
Ken Griffin’s Stake: $1.6B
It seems the AI-led rally tempted billionaire Ken Griffin to load up on Microsoft Corp big time in the September quarter, as his hedge fund bought 1,631,542 more Microsoft shares during the period, increasing its stake in Microsoft Corp to $1.6 billion.
Microsoft Corp is the most popular stock among the 910 hedge funds tracked by Insider Monkey. A total of 306 funds had stakes in Microsoft Corp.
Here is what White Brook Capital has to say about Microsoft Corporation in its Q3 2023 investor letter:
“The magnificent seven, that underpin the S&P 500 performance, which includes Microsoft Corporation, 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 Ken Griffin Stock Portfolio: Top 10 Stock Picks and the Centi-Billionaire Bill Gates’ Top 15 Dividend Stocks.
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- Ken Griffin Stock Portfolio: Top 10 Stock Picks
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Disclosure. None. 12 Best Tech Stocks To Buy According to Billionaire Ken Griffin was initially published on Insider Monkey.
