In this article, we will take a look at the 5 cash-rich stocks to buy according to hedge funds. To read our analysis of the recent trends, and market activity, you can go to the 11 Cash-Rich Stocks to Buy According to Hedge Funds.
5. NVIDIA Corporation (NASDAQ:NVDA)
Latest Cash and Short-Term Investments: $18.28 billion
Number of Hedge Fund Holders: 180
NVIDIA Corporation (NASDAQ:NVDA) is a leading technology company focused on the design and manufacturing of accelerated computing hardware and software products. Its core businesses comprise of Gaming, Data Center, Professional Visualization, and Automotive, with Gaming and Data Center making up for more than 80% of its revenues.
NVIDIA Corporation (NASDAQ:NVDA) posted a revenue of $18.1 billion in Q3, 206% more than a year ago and $2.0 billion more than consensus. Its normalized EPS of $4.02 surpassed consensus by $0.63.
Following the earnings release, Wells Fargo analyst Aaron Rakers raised the price target for NVIDIA Corp (NASDAQ:NVDA) shares to $675 from $600 and maintained an ‘Overweight’ rating. The target price represents a potential upside of 47.03% based on the share price on December 5.
Hedge funds are bullish about NVIDIA Corporation (NASDAQ:NVDA) shares as the number of hedge funds that own its shares has increased from 106 in Q1 to 180 in Q3 2023. These hedge funds together held shares worth $29.6 billion according to Insider Monkey data.
4. Alphabet Inc. (NASDAQ:GOOGL)
Latest Cash and Short-Term Investments: $119.94 billion
Number of Hedge Fund Holders: 221
Alphabet Inc. (NASDAQ:GOOGL), based in Mountain View, California, is the parent company of several companies including Google, Verily Life Sciences, GV (formerly Google Ventures), Calico, and X-the moonshot factory. Majority of its revenue is generated by Google Services which comprises of ads, Android, Chrome, hardware, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube.
On October 24, Alphabet Inc. (NASDAQ:GOOGL) released financial results for the three months ended September 30. Its revenues increased by 11% y-o-y to $76.7 billion while net income surged by 42% y-o-y to $19.7 billion.
Following the earnings release, Oppenheimer analyst Jason Helfstein reiterated an ‘Outperform’ rating for Alphabet Inc. (NASDAQ:GOOGL) shares with a price target of $160 per share.
This is what Wedgewood Partners, an investment management company, had to say about Alphabet Inc. (NASDAQ:GOOGL) in its Q3 2023 investor letter:
“Alphabet was a top contributor to performance as search revenues accelerated during their second quarter. This improved performance flies in the face of fears that demand for the Company’s advertising inventory and core search functionality would be diluted by the Company’s own generative-AI offerings and outside substitutes. Alphabet subsidiaries have been at the vanguard of artificial intelligence for more than a decade. The Company has spent almost $150 billion on research and development over just the past five years, and today over 80% of the Company’s advertising customers use an AI-enabled tool when they run their Google Search and YouTube campaigns. Thus, Alphabet is certainly not “behind the curve” in any way, shape, or form when it comes to AI. Quite the contrary, the Company has ample room to rationalize spending to drive better returns on investments and increase capital returns to shareholders at these relatively attractive forward earnings multiples.”
3. Meta Platforms, Inc. (NASDAQ:META)
Latest Cash and Short-Term Investments: $61.12 billion
Number of Hedge Fund Holders: 234
Menlo Park, California-based Meta Platforms, Inc. (NASDAQ:META) is a technology conglomerate formerly known as Facebook, Inc. Its businesses are reported under two segments: Family of Apps – comprising social media web and smartphone apps Facebook, Instagram, Messenger, and WhatsApp; and Reality Labs – comprising augmented and virtual reality products including hardware, software, and content.
Meta Platforms, Inc. (NASDAQ:META) recorded a strong performance in the third quarter of the year. Its revenue increased by 23% y-o-y to $34 billion while net income surged by a whopping 164% y-o-y to $11.6 billion. The normalized EPS of $4.39 surpassed the consensus estimates by $0.79.
Following the earnings release, Truist Securities analyst Robert Zeller raised the price target for Meta Platforms, Inc. (NASDAQ:META) shares to $405 from $390 and maintained a ‘Buy’ rating.
Meta Platforms, Inc. (NASDAQ:META) ranks #3 on our list of 11 cash-rich stocks to buy according to hedge funds based on the number of hedge funds holding its shares as of September 30, 2023. The shares of the social media giant were owned by 234 hedge funds with a total value of $35.2 billion. Prominent hedge funds, such as Arrowstreet Capital, Tiger Global Management LLC, and GQG Partners, held the highest number of its shares among hedge funds.
2. Amazon.com, Inc. (NASDAQ:AMZN)
Latest Cash and Short-Term Investments: $64.17 billion
Number of Hedge Fund Holders: 286
Amazon.com, Inc. (NASDAQ:AMZN) is a multinational technology company operating online and physical stores where it sells its own products as well as allows third-party sellers to sell their products to consumers. It manufactures and sells electronic devices, including Kindle, Fire tablet, Fire TV, Echo, and Ring, and develops and produces media content; and provides cloud computing services through Amazon Web Services platform.
Amazon.com, Inc. (NASDAQ:AMZN) is highly sought after by hedge funds as 286 out of the 910 hedge funds tracked by Insider Monkey held its shares with a total value of $38.9 billion, as of Q3 2023.
In its Polen Global Growth Q3 investor letter, Polen Capital, an investment management firm, made the following comments about Amazon.com, Inc. (NASDAQ:AMZN):
“Amazon continues to showcase its place as one of the most competitively advantaged companies in the world. The company has made significant progress in managing costs and better leveraging existing capacity, driving a strong recovery in its profitability. We think there’s additional room for improvement. AWS growth seems to be stabilizing even while management continues to work with clients to optimize their infrastructure spend. Roughly 90% of global IT spending remains on premise. We believe this will eventually flip, with most IT spending ultimately moving to the cloud over time. We think AWS will be a significant beneficiary of this transition. [. . .] At Amazon’s current price, we believe the company is well positioned to deliver a mid-teens or higher total shareholder return for our clients over the next five plus years without a Herculean effort from the business. It simply needs to continue executing on current businesses and growing into the capacity it built during and immediately after the pandemic.”
1. Microsoft Corporation (NASDAQ:MSFT)
Latest Cash and Short-Term Investments: $143.95 billion
Number of Hedge Fund Holders: 306
Redmond, Washington-based Microsoft Corporation (NASDAQ:MSFT) is a leading technology company with products include operating systems, cross-device productivity applications, server applications, business solution applications, desktop and server management tools, software development tools, and video games.
Microsoft Corporation (NASDAQ:MSFT) is among the leaders in the AI race following its partnership with OpenAI, the creator of Chat GPT – an artificial intelligence powered chatbot. Microsoft Corporation (NASDAQ:MSFT) is using its AI capabilities to improve its existing products and services including Bing Search, Cloud, as well as its Office Suite.
In its Baron Technology Fund Q3 2023 investor letter, Baron Funds, an investment management company, made the following comments about Microsoft Corporation (NASDAQ:MSFT):
“Looking at the big picture, Microsoft continues to execute at a high level, navigating a challenging macro backdrop while aggressively investing in long-term growth, and we remain confident that Microsoft is well positioned to leverage AI over the medium to long term as it infuses Open AI and other generative AI technologies across its entire product portfolio.”
As of Q3 2023, Microsoft Corporation (NASDAQ:MSFT) ranks highest on our list of 11 cash-rich stocks to buy according to hedge funds in terms of hedge fund sentiment as well as the huge cash pile that it has accumulated. It was the most sought-after stock among the 910 hedge funds tracked by Insider Monkey. 306 of these hedge funds held shares in the software giant, valued at $72 billion.
You may also like to read 12 Best Gold Dividend Stocks To Buy Now and 11 Youngest Hedge Fund Billionaires and Their Top Stock Picks
