In this article, we will take a look at the 10 NASDAQ stocks with biggest upside.
The NASDAQ has surprised investors this year, thanks to the AI-driven rally in tech stocks that is making some analysts uneasy amid valuation concerns. As the US economy is still not out of the woods and there are warnings about recession, some analysts believe tech stock valuations have gone too far. For example, despite the outperformance of NVIDIA Corp (NASDAQ:NVDA) in its Q2 results and the company’s dominance in the generative AI-based chips domain, some analysts believe the stock is overvalued. Recently, Federated Hermes Chief Equity Strategist Phil Orlando, while talking to Yahoo Finance, highlighted the concentration of value and stock market gains in 2023 He said that eight major tech stocks are up about 65% in the first seven months of the year.
“How are the other 492 companies doing in the S&P 500? There up about 7%,” Orlando said.
The analyst said that tech stocks are up for a large correction this year. He thinks NVIDIA Corp (NASDAQ:NVDA) is the “poster child” of this “imbalance.”
“From the bottom of the market last October to where NVIDIA Corp (NASDAQ:NVDA)’s peaked out over the course of the last month or so, the stock has gone up by a multiple of five times. From a valuation perspective, they’re trading at something like 40 times forward revenues and 130 times forward revenues and 130 times forward earnings. That, in our view, is excessive, and it’s reminiscent of what the tech stocks did in that fourth quarter of 1999 as we were going into the Y2K calendar changeover.”
Orlando said that tech companies like Apple and NVIDIA Corp (NASDAQ:NVDA) are “phenomenal” but amid the expected correction and pullback he’d rather invest in these companies later at cheaper prices. For now, Orlando thinks the market correction would open up new opportunities in value and small-cap stocks.
Despite warnings of a market correction, there are some stocks which still have huge upside potential according to experts. In this article we decided to talk about some of these stocks.
Photo by Pascal Bernardon on Unsplash
Our Methodology
For this article we conducted a survey of mainstream financial media and checked over 10 credible financial websites to see which NASDAQ stocks have potential to grow in the coming weeks and months according to these websites. We picked 10 stocks which frequently appeared in our survey. These stocks have upside potential according to notable financial websites. We have also mentioned the number of hedge fund investors having stakes in each of these companies. Some notable names in the list include Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META) and Apple Inc. (NASDAQ:AAPL).
NASDAQ Stocks with Biggest Upside
10. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 15
Upstart Holdings, Inc. (NASDAQ:UPST) shares have gained about 137% year to date but the financial media outlets we surveyed believe the stock is expected to retain this momentum. In August, however, Upstart Holdings, Inc. (NASDAQ:UPST) fell after the company gave soft Q3 guidance.
In the second quarter Upstart Holdings, Inc. (NASDAQ:UPST)’s adjusted EPS came in at $0.06 beating estimates by $0.13. Revenue in the period fell 40.5% year over year but still beat estimates by $0.45 million.
Like NVIDIA Corp (NASDAQ:NVDA), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META) and Apple Inc. (NASDAQ:AAPL), UPST is one of the stocks with upside potential.
9. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 46
Constellation Energy Corporation (NASDAQ:CEG) shares have gained about 32% year to date through September 9. Constellation Energy Corporation (NASDAQ:CEG) in August posted strong Q2 results and upped its guidance for full-year EBITDA.
As of the end of the second quarter of 2023, 46 hedge funds tracked by Insider Monkey had stakes in Constellation Energy Corporation (NASDAQ:CEG). The biggest hedge fund stakeholder of Constellation Energy Corporation (NASDAQ:CEG) was William B. Gray’s Orbis Investment Management which owns a $495 million stake in the company.
Constellation Energy Corporation (NASDAQ:CEG)’s management said the following during its latest earnings call:
“We definitely see some of this margin also now going into 2025 as we sign up these customers, and the activity we’re seeing in the market. So, we expect that to be there over the next few years on the gross margin optimization also. And then, the macro trend of sustainability products is something that you add to that as it scales in the future. We’ve talked about our core product quite a bit with you all. The amount of volumes, we’re seeing there and the margins have been continuing to grow. And now we have the possibility with hourly CFE, carbon-free energy matching to look at the next wave of sustainability products to get our customers signed up for longer terms and for decent margins.
So, we’re feeling good about the sustainability environment, and it really does start with the balance sheet. Our competitiveness is there. I think others in this interest rate environment with the collateral costs and the borrowing costs hit, quite do what we can do. So, I think it’s – we’re feeling good about it.”
To read the full earnings call transcript click here.
8. Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders: 47
Airbnb, Inc. (NASDAQ:ABNB) is considered as a top tech stock with upside potential and many analysts also believe the stock is undervalued. Airbnb, Inc. (NASDAQ:ABNB) is expected to announce AI features integrated with its platform later this year. Airbnb, Inc. (NASDAQ:ABNB) recently jumped after the stock was added to the S&P 500
During the second quarter Airbnb, Inc. (NASDAQ:ABNB)’s GAAP EPS came in at $0.98, beating estimates by $0.20. Revenue in the period jumped 18.1% year over year to $2.48 billion, surpassing estimates by $60 million.
During Q2 earnings call Airbnb, Inc. (NASDAQ:ABNB) CEO talked about how AI and generative AI applications could be of use for the company:
“First of all, when you call a hotel, they’re usually one property and they’re aware of every room. We’re nearly every country in the world. Often guest host will call us, and they will even potentially speak a different language than the person on the other side, the host, the guest and host. There are nearly 70 different policies that you could be adjudicating. Many of these are 100 pages long. So imagine a customer service agent trying to quickly deal with an issue with somebody from two people from two different countries in a neighborhood that the agent may never even have heard of.
What AI can do, and we’re using a pilot to GPT-4, is AI can read all their policies. No human can ever quickly read all those policies. It can read the case history of both guests and hosts. It could summarize the case issue, and it can even recommend what the ruling should be based on our policies, and it can then write a macro that the customer service agent can basically adopt and amend. If we get all this right, it’s going to do things. And in your term, it’s going to actually make customer service a lot more effective, because agents will actually be able to handle a lot more tickets than many tickets. You’ll never even have to talk to an agent, but also the service to be more reliable, which will unlock more growth. Now, this of course leads to the bigger question.
What can we do with AI? And I just wanted to offer a minute or two of thoughts, and I’ve shared this …[Read the detailed transcript of the call here.]
7. QUALCOMM, Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 73
QUALCOMM, Incorporated (NASDAQ:QCOM) is under pressure after the company gave weak Q4 guidance. QUALCOMM, Incorporated (NASDAQ:QCOM) is also taking a hit amid bad news from China and an overall lackluster consumer demand. During the fiscal third quarter QUALCOMM, Incorporated (NASDAQ:QCOM)’s adjusted EPS came in at $1.87 beating estimates by $0.06. Revenue in the period fell 22.7% year over year to $8.44 billion, missing estimates by $70 million.
As of the end of the second quarter of 2023, 73 hedge funds tracked by Insider Monkey had stakes in QUALCOMM, Incorporated (NASDAQ:QCOM). The biggest stakeholder of QUALCOMM, Incorporated (NASDAQ:QCOM) was Israel Englander’s Millennium Management which owns a $270.2 million stake in the company.
6. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 78
Booking Holdings Inc. (NASDAQ:BKNG) is benefitting from the rise in travel demand across the globe. In the second quarter, Booking Holdings Inc. (NASDAQ:BKNG)’s adjusted EPS came in at $37.62 beating estimates by $8.46. Revenue in the quarter came in at $5.5 billion, surpassing estimates by $330 million. Room nights booked increased 9% from the prior-year quarter.
As of the end of the second quarter of 2023, 78 hedge funds tracked by Insider Monkey had stakes in Booking Holdings Inc. (NASDAQ:BKNG).
Like BNKG, NVIDIA Corp (NASDAQ:NVDA), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META) and Apple Inc. (NASDAQ:AAPL) are some of the stocks with upside potential according to analysts.
L1 Capital International Fund made the following comment about Booking Holdings Inc. (NASDAQ:BKNG) in its first quarter 2023 investor letter:
“Booking Holdings Inc. (NASDAQ:BKNG) was the largest positive contributor to the March 2023 quarterly performance. We meaningfully added to our investment in Booking in the middle of 2022 when the market was overly focused on disruptions to travel in Europe caused by airport understaffing and other COVID-19 induced inefficiencies, as well as concerns that an economic downturn would materially reduce discretionary travel. Since then, the travel environment has continued to normalise, with China being the last major market to open travel borders post COVID-19. People the world over have demonstrated their ongoing desire to travel, an industry that has historically grown significantly faster than GDP growth. Management has continued to execute a well-planned strategy to increase connections with customers booking accommodation, including offering flights, on ground transport, activities and payment options. After increasing over 20% in the December 2022 quarter, Booking’s share price increased a further 30%+ during the March 2023 quarter. Booking is now trading within our assessed view of fair value. We retain confidence that management will continue to deliver returns to shareholders and Booking remains one of the Fund’s largest holdings.”
5. Paypal Holdings Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 86
Paypal Holdings Inc. (NASDAQ:PYPL) ranks 5th in our list of the best NASDAQ stocks with upside potential according to the media. Paypal Holdings Inc. (NASDAQ:PYPL) recently made headlines after the company launched a U.S. dollar-denominated stablecoin, PayPal USD (PY-USD).
Alex Chriss was recently named as Paypal Holdings Inc. (NASDAQ:PYPL)’s president and CEO.
RiverPark Large Growth Fund made the following comment about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q2 2023 investor letter:
“PayPal Holdings, Inc. (NASDAQ:PYPL): PayPal shares were a top detractor in the quarter despite reporting better than anticipated 1Q earnings and raising guidance for the remainder of 2023. Revenue of $7 billion grew 9% year over year, an acceleration from the prior year and quarter. EPS of 1.17 grew 33% year over year on better cost discipline leading to better operating margins. The disappointment was centered around weaker gross margins, as unbranded checkout, which has lower gross margins, accelerated faster than branded checkout. Management anticipates this trend to continue and therefore guided to lower gross margins for the remainder of the year. Despite the gross margin headwind, operating margins continue to expand due to expense discipline.
PayPal is the most accepted digital wallet – with almost triple the acceptance of Apple Pay, the number two digital wallet – providing the purest exposure to the secular growth in ecommerce-driven digital payments. PayPal is also a key beneficiary of consumer-to-consumer payment trends through its Venmo peer-to-peer (P2P) payment service. With a 1Q non-GAAP operating margin of 23%, PYPL also has significant margin expansion potential given that competitors Adyen, Visa and Mastercard have 50%-65% operating margins. We believe the combination of the secular growth of eCommerce and P2P payments, along with expanding operating leverage and the strategic use of the company’s significant and growing cash balance should fuel at least a high teens earnings growth rate over the next five years. This, to us, presents an excellent risk/reward given that PYPL trades at a below market multiple.”
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 135
Apple Inc. (NASDAQ:AAPL) shares were under pressure as of September 6 after Wall Street Journal reported China has ordered its government agencies to stop using iPhones as part of its hostility against the US. However, Wall Street analysts believe Apple Inc. (NASDAQ:AAPL) selloff after this news is overdone.
Wedbush’s Dan Ives said in a note that Chinese government agencies account for less than 500,000 iPhones out of the roughly 45 million iPhones he expects to be sold in the country during the next one year.
Ives has an Outperform rating and a $230 price target on Apple Inc. (NASDAQ:AAPL).
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 225
Meta Platforms, Inc. (NASDAQ:META) is one of the top NASDAQ stocks with upside potential. Goldman Sachs’ Brian Nowak recently said that Meta Platforms, Inc. (NASDAQ:META) could generate as much as $20 per share in earnings by 2024, driven by Reels, Click to Message and ads. Nowak said that Reels monetization results have surprised him and they account for just about 28% of the total core ads business. The analyst has a $375 price target on Meta Platforms, Inc. (NASDAQ:META).
RiverPark Large Growth Fund made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q2 2023 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): META shares, continuing their rebound, were the top contributor for the second quarter. The company reported 1Q23 results, beating revenue expectations and lowering guidance for operating expenses and capital expenditures, while increasing revenue expectations.
META owns multiple social media platforms, each with more than one billion users, has an 80% gross margin, and generated $20 billion of FCF in 2022. Both its Facebook and its Instagram franchises have more than 2 billion Daily Active Users and generate the bulk of the company’s revenue. Recently, the company’s short form video offering, Reels, has gained mass user engagement and growing advertiser adoption, which we believe will return the company to strong revenue and free cash flow growth. After its advance, META shares trade at 19x Wall Street’s consensus estimates for 2024 EPS, estimates that we think could prove to be too low.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 278
Analysts believe Amazon.com, Inc. (NASDAQ:AMZN) is one of the top tech stocks with huge upside potential. Morgan Stanley recently said that Amazon.com, Inc. (NASDAQ:AMZN)’s upcoming event regarding AWS is a good opportunity for the company to create a buzz around its generative AI offerings. Analysts are also hopeful that Prime Day event this year would act as a catalyst for Amazon.com, Inc. (NASDAQ:AMZN).
Insider Monkey’s database of 910 hedge funds shows that 278 hedge funds had stakes in Amazon.com, Inc. (NASDAQ:AMZN) at the end of the June quarter.
RiverPark Large Growth Fund made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2023 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN): Amazon was a top contributor in the second quarter, in reaction to a solid 1Q23 earnings report. The company generated $127 billion of revenue (2% ahead of expectations) and nearly $5 billion of operating income (57% better than expectations) driven by rebounding online sales and strong incremental gross margins. During the company’s earnings conference call, Amazon management pointed to easing inflationary pressures, higher productivity gains, and lower expected capital spending for the remainder of the year. The only negative in the quarter was slowing AWS revenue growth, which we believe will rebound later in the year.
With its ability to continue its market share gains in three leading businesses (e-commerce, web services and online advertising), plus a multi-year operating margin expansion opportunity (from improved e-commerce margins and greater contribution from the faster growing, higher margin AWS and advertising segments), we believe Amazon remains one of the best-positioned global growth companies in the world. AMZN shares trade at a 10-year trough EPS multiple, despite what we believe to be currently depressed margins and earnings.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 300
Microsoft Corporation (NASDAQ:MSFT) remains a top tech stock with upside potential according to market analysts as everyone is betting that the company’s huge investments in AI would bear fruit in the future. Microsoft Corporation (NASDAQ:MSFT) has already gained about 40% year to date.
Microsoft Corporation (NASDAQ:MSFT) is the most popular stock among the elite hedge funds tracked by Insider Monkey as 300 hedge funds reported owning stakes in the company as of the end of the June quarter.
Microsoft Corporation (NASDAQ:MSFT) is relentlessly launching new AI offerings and signing AI deals. Recently, digital pathology solutions company Paige said it entered a partnership with Microsoft Corporation (NASDAQ:MSFT) to build an AI model for cancer detection.
Alger Spectra Fund made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its Q2 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). During the period, shares contributed to performance as the company reported fiscal third quarter results above expectations driven by outperformance in More Personal Computing and Office Commercial. Additionally. management provided in-line Azure guidance, easing investor concerns of a potential slowdown in Azure growth estimates. Moreover, management provided encouraging commentary around Al, noting strong long-term opportunities as they integrate various Al offerings into their products and services.”
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Disclosure: None. 10 NASDAQ Stocks with Biggest Upside is originally published on Insider Monkey.
