1. Nike Inc. (NYSE:NKE)
Number of Hedge Fund Holders as of Q4: 73
Pershing Square’s Equity Stake: $1.42 Billion
Upside Potential as of May 5: 35.43%
Nike Inc. (NYSE:NKE), headquartered in Oregon, is a globally recognized leader in athletic footwear, apparel, and accessories. Employing more than 83,000 people worldwide, the company operates through three primary segments: Nike Brand, Converse, and Corporate.
In its most recent quarterly earnings report for the three months ending February 28, Nike Inc. (NYSE:NKE) reported earnings per share of $0.54, significantly surpassing consensus estimates of $0.29. Revenue reached $11.27 billion, also beating projections of $11.01 billion. However, the performance represented a decline from the same period the previous year, when Nike posted a net income of $1.17 billion, or $0.77 per share, on $12.4 billion in revenue. This year’s net income declined to $794 million, reflecting a 32% drop in profits compared to the year-ago period.
The sales decline, approximately 9% year-over-year, was attributed to weakened demand in January and February, which followed strong December holiday performance. Nike Inc. (NYSE:NKE) also experienced margin pressure during the quarter, as gross margin dropped by 3.3 percentage points to 41.5%, missing analysts’ expectations of 41.8%. This contraction was largely due to increased discounts, higher product costs, and a need to clear out outdated inventory to make room for new and more innovative product lines.
Direct-to-consumer sales also declined, with revenue from Nike’s owned channels dropping 12% to $4.7 billion, while wholesale revenue slipped 7% to $6.2 billion. The broader retail environment has been challenged by declining consumer sentiment and weaker-than-expected retail sales in both January and February.
Compounding these challenges, the imposition of a new 20% U.S. tariff on goods imported from China has placed additional strain on Nike’s cost structure. According to a recent manufacturing disclosure, approximately 24% of Nike’s suppliers and manufacturers are located in China. Without a clear strategy to offset these new costs, Nike’s profit margins are likely to remain under pressure. The company has yet to indicate how it plans to address the financial impact of these duties.
Despite these short-term setbacks, Nike Inc. (NYSE:NKE) maintains a strong position within the retail sector and remains a brand with global reach and customer loyalty. With an upside potential of 35.43%, the stock continues to be seen as an attractive investment opportunity for long-term growth.
Overall, NKE ranks first among Billionaire Bill Ackman’s 7 stock picks with huge upside potential. While we acknowledge the potential of these stock picks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than NKE but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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