In this article, we discuss Two Sigma’s 10 Stock Picks with Huge Upside Potential.
Two Sigma Advisors is one of the leading players in the quantitative hedge fund space, according to Archive Market Research’s analysis. The quant fund operates as an investment management company and was founded in 2001 by David Siegel, a computer scientist, and John Overdeck, a mathematician. The fund manages $60 billion worth of assets as of April 2025.
Quant funds and their multi-strategy counterparts often do well in the market. A Reuters analysis found that many quant hedge funds posted double-digit growth in 2024. This growth happened despite “negative drivers” in sectors like energy, metals, and European equities. Two Sigma, alongside quant funds like D.E. Shaw and Citadel, also managed solid performance last year.
The hedge fund’s Spectrum Fund returned 10.9% and 14.3% for the Absolute Return Enhanced Fund. But one might argue that for a hedge fund that relies on complex algorithms to make investment decisions, the asset manager should have beat the market. For context, the S&P 500 finished 2024 with a total gain of 25.0%.
READ ALSO: Billionaire Ray Dalio’s Bridgewater’s 10 Stock Picks with Huge Upside Potential and Billionaire Mario Gabelli’s 10 Large-Cap Stock Picks with Huge Upside Potential.
In August last year, the billionaire founders of the hedge fund exited from active management because they couldn’t resolve tension between them.
“Over the past year and a half, we and our senior management team have dedicated significant effort to securing the long-term success and stability of Two Sigma. Throughout this process, our own roles have been a central consideration. Today, we are confident that stepping back from our day-to-day management roles is the right decision at this time,” the co-founders said in a letter to investors.
But recent reports indicate that Overdeck is returning to active management. “John has determined now is the right time for him to return to this role in order to progress certain priorities and decisions he believes are important to the future of Two Sigma,” Two Sigma said in a letter. Siegel chose to remain outside of the fund’s top ranks but had “full confidence” in Scott Hoffman, one of the Co-CEOs who took over last year.
It is good news that Two Sigma won’t be held back by feuding management because they need it to navigate a challenging market. According to a Reuters analysis, the risk of recession is alarming, even though it may not be as clear-cut. The report quoted Zurich Insurance Group’s chief market strategist, Guy Miller, who said that the risk of a US recession is quite plausible. “Recession risks have risen markedly even if there are some deals struck on tariffs. The risk of a U.S. recession is 50-50, it’s that close.”
David Siegel of Two Sigma Advisors
Our Methodology
We sifted through Two Sigma Advisors’ SEC Q4 2024 13F filings to create this list. We primarily targeted the fund’s most valuable equity holdings (excluding ETFs and options) and then ranked the picks based on analyst price targets as of May 8, 2025. We picked stocks with an upside potential of at least 30% and then selected the top 10. We have also added the broader hedge fund sentiment for the stocks, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Billionaire Quants’ Two Sigma’s 10 Stock Picks with Huge Upside Potential
10. BILL Holdings, Inc. (NYSE:BILL)
Two Sigma Advisors Stake Value: $$94,239,875
Upside Potential as of May 8: 31.19%
Number of Hedge Fund Holders: 64
BILL Holdings, Inc. (NYSE:BILL) is a financial operations platform for small and midsize businesses (SMBs). The company provides a suite of software solutions (BILL Platform, Divvy, Invoice2go, and BILL Pay) that help SMBs manage their accounts payable, accounts receivable, expense management, and other financial workflows through a single integrated platform.
In Q2 fiscal 2025, BILL Holdings, Inc.’s (NYSE:BILL) total revenue increased 14% year-over-year to $362.6 million. Core revenue, which consists of subscription and transaction fees, grew even faster at 16% year-over-year to reach $319.6 million. The company’s customer base expanded to 481,300 businesses as of the quarter end, processing $84 billion in total payment volume, up 13% from the previous year.
In late April 2025, the company revealed that Xero, a global small business platform, would leverage BILL Holdings, Inc.’s (NYSE:BILL) technology to launch US online bill payments. This integration allows SMBs to pay bills without leaving the Xero platform. The integration addresses a critical need as Xero’s research found that 38% of SMBs struggle with tracking due dates and 20% cite difficulties managing and paying bills in one place.
On April 30, 2025, KeyBanc adjusted its price target for BILL Holdings, Inc. (NYSE:BILL) to $60 from $70 while maintaining an Overweight rating. The firm cited “modestly softer spend” anticipated in the second half of 2025.
9. Alphabet Inc. (NASDAQ:GOOGL)
Two Sigma Advisors Stake Value: $747,015,660
Upside Potential as of May 8: 31.32%
Number of Hedge Fund Holders: 234
Alphabet Inc. (NASDAQ:GOOGL) is the parent company of Google, the world’s dominant search engine. The technology conglomerate also owns YouTube, Android operating system, Google Cloud, and a portfolio of other services, including Gmail, Google Maps, and Chrome browser, as well as emerging artificial intelligence (AI) technologies like Gemini.
In its Q1 2025 financial results, Alphabet Inc.’s (NASDAQ:GOOGL) consolidated revenues rose by 12% year-over-year to $90.2 billion. The company reported the most substantial growth in Google Cloud, which surged 28% to reach $12.3 billion. Google Services, including Search, YouTube, and subscriptions, grew by 10% to $77.3 billion. And the company’s net income jumped 46% compared to the same period last year.
Despite these strong financials, Alphabet Inc. (NASDAQ:GOOGL) faces significant headwinds. On May 7, 2025, the company’s shares fell sharply following testimony by Apple’s (NASDAQ:AAPL) SVP of Services Eddy Cue in the Department of Justice’s antitrust lawsuit remedies hearing against Google’s Search business. The testimony suggested that Apple (NASDAQ:AAPL) is “actively looking at” revamping its Safari web browser to focus on AI-powered search engines. The Financial Times, and investors at large, understood this to mean that Apple might end the longtime partnership with Google, which is estimated to be worth $20 billion annually.
Despite this situation, Stifel analysts have maintained their Buy rating and $200.00 price target on Alphabet Inc. (NASDAQ:GOOGL) stock. They cited the company’s excellent financial health with a “GREAT” overall score and robust revenue growth of approximately 13% over the last twelve months.
8. Adobe Inc. (NASDAQ:ADBE)
Two Sigma Advisors Stake Value: $395,320,520
Upside Potential as of May 8: 32.02%
Number of Hedge Fund Holders: 117
Adobe Inc. (NASDAQ:ADBE) is a global software company best known for creative and multimedia applications. Its product portfolio includes Photoshop, Illustrator, Acrobat, and Premiere Pro. The products serve creative professionals, marketers, and enterprises across design, document management, and digital experience segments.
Adobe Inc.’s (NASDAQ:ADBE) financials in Q1 FY25 point to a company that is doing well. Revenue came in at $5.7 billion, a 10% year-over-year increase, which surpassed estimates by approximately $50 million. The company’s Digital Media segment, which includes Creative Cloud and Document Cloud, grew by 12% to $4.25 billion, while Digital Experience revenue increased by 7% to $1.37 billion. Non-GAAP earnings per share came in at $5.08, beating analyst expectations by $0.11.
Adobe Inc. (NASDAQ:ADBE) has also established itself as a leader in the generative AI space. For instance, its Firefly platform has powered over 12 billion generations since its launch. CEO Shantanu Narayen emphasized during the earnings call that the company’s differentiated approach to AI combines proprietary models with enterprise-grade security and governance. As a result, Adobe (NASDAQ:ADBE) can capture demand across creative, document, and experience workflows. The integration of AI capabilities throughout its product portfolio, including text-to-image and text-to-video generation in Creative Cloud applications, has enhanced user productivity and driven subscription growth. Despite these strengths, RBC Capital analyst Matthew Swanson lowered the firm’s price target on Adobe (NASDAQ:ADBE) from $530 to $480 on April 14, 2025. Swanson cited peer multiple contractions, though he maintained an Outperform rating.
7. NIKE, Inc. (NYSE:NKE)
Two Sigma Advisors Stake Value: $275,718,779
Upside Potential as of May 8: 34.29%
Number of Hedge Fund Holders: 73
NIKE, Inc. (NYSE:NKE) is an athletic footwear, apparel, equipment, and accessories company. It designs, develops, markets, and sells its products under various brand names including Nike, Jordan, and Converse. The company caters to a wide range of sports categories, age groups, and price points worldwide.
The footwear giant is currently undergoing leadership changes. CEO Elliott Hill, who came out of retirement to take the top job in October 2025, restructured the executive ranks. Heidi O’Neill, NIKE, Inc.’s (NYSE:NKE) President of consumer, product, and brand, will step down after a 26-year tenure with the company. As part of this reorganization, key roles, including consumer and sport, marketing, and product creation, will now report directly to Hill. Amy Montagne is now President of the Nike brand, Phil McCartney is Executive Vice President (EVP), Chief Innovation, Design, Product & Brand, and Nicole Graham is EVP, Chief Marketing Officer.
As that happens, NIKE, Inc. (NYSE:NKE) is feeling the pinch from Trump’s tariffs. Earlier this month, the company joined other footwear manufacturers, including Adidas, Under Armour (NYSE:UAA), and Puma, to implore the President for leniency. The companies signed a letter from the Footwear Distributors and Retailers of America calling on President Trump to exempt footwear from tariffs. The companies warned that the levies pose an “existential threat” to the industry. They argued that they (the tariffs) would drive up consumer costs and potentially cause businesses to close.
On May 6, 2025, Stifel analysts maintained a Hold rating on NIKE, Inc. (NYSE:NKE) with a steady price target of $64.00. The firm wrote that the “strategic shift” in the company’s leadership balances Nike’s (NYSE:NKE) risk/reward profile.
6. Coinbase Global, Inc. (NASDAQ:COIN)
Two Sigma Advisors Stake Value: $101,430,550
Upside Potential as of May 8: 37.80%
Number of Hedge Fund Holders: 68
Coinbase Global, Inc. (NASDAQ:COIN) is the largest cryptocurrency exchange platform in the United States. It provides a marketplace for buying, selling, transferring, and storing digital assets. The company’s product lineup includes Coinbase Exchange, Coinbase Wallet, Coinbase Prime, Coinbase Commerce, Coinbase Cloud, and Coinbase NFT.
Coinbase Global, Inc. (NASDAQ:COIN) is expanding its partnerships and product offerings. On May 6, the company announced a partnership with Riot Games. The deal makes Coinbase (NASDAQ:COIN) the exclusive cryptocurrency exchange and official blockchain technology partner for global League of Legends and VALORANT esports events. The collaboration will introduce new in-game segments like an “Econ Report” in VALORANT and “Gold Grind” in League of Legends.
About a week ago, Coinbase Global, Inc. (NASDAQ:COIN) launched the Coinbase Bitcoin Yield Fund. The product targets institutional investors with 4-8% net returns in Bitcoin per year. This move addresses growing institutional demand for Bitcoin yield through a conservative strategy designed to lower investment and operational risks.
On May 7, 2025, Coinbase Global, Inc. (NASDAQ:COIN) received a downgrade from analysts at Monness, Crespi, Hardt. The analysts changed their rating from Buy to Neutral and removed their price target ahead of Coinbase’s (NASDAQ:COIN) first-quarter earnings report. The analysts cited concerns about potentially weaker-than-expected financial results, subdued quarter-to-date transaction revenue, and the possibility of disappointing second-quarter guidance.
5. Thermo Fisher Scientific Inc. (NYSE:TMO)
Two Sigma Advisors Stake Value: $485,478,636
Upside Potential as of May 8: 38.03%
Number of Hedge Fund Holders: 100
Thermo Fisher Scientific Inc. (NYSE:TMO) is a global leader in scientific research and laboratory solutions. It provides tools, technologies, and services to help scientists, healthcare professionals, and businesses advance discoveries and improve lives.
The company has recently made several moves to strengthen its market position. On April 24, 2025, Thermo Fisher Scientific Inc. (NYSE:TMO) announced a $2 billion investment in the US over the next four years. The first $1.5 billion will be allocated to capital expenditures for enhancing and expanding US manufacturing operations, and $500 million will go to R&D focused on high-impact innovation. This investment builds on the company’s substantial presence in US manufacturing, which already includes 64 operations across 37 states. On April 28, 2025, Thermo Fisher Scientific Inc. (NYSE:TMO) introduced an enhanced platform technology and a new CHO K-1 cell line that can reduce timelines to Investigational New Drug (IND) filing from 13 to nine months. The solution helps biotech and pharmaceutical companies overcome logistical complexities in pre-clinical biologic drug development.
The company has also taken some cost-cutting measures. On May 3, 2025, Thermo Fisher (NYSE:TMO) announced it would close its location near downtown Orlando and lay off 58 employees. The move will primarily affect researchers, nurses, and staff tied to its PPD Clinical Research Services division. On April 25, Scotiabank analyst Sung Ji Nam adjusted the price target for Thermo Fisher Scientific Inc. (NYSE:TMO) to $605 from $650. Nam wrote that although the company surpassed expectations in its first quarter results of 2025, it revised the full-year guidance. Nevertheless, Nam maintained a Sector Perform rating.
4. Upstart Holdings, Inc. (NASDAQ:UPST)
Two Sigma Advisors Stake Value: $105,241,601
Upside Potential as of May 8: 40.16%
Number of Hedge Fund Holders: 39
Upstart Holdings, Inc. (NASDAQ:UPST) is a financial technology company. The company uses AI to make lending smarter and more inclusive. Its platform offers personal loans, automotive retail and refinance loans, and home equity lines of credit.
Upstart’s (NASDAQ:UPST) Q1 2025 revenue surged to $213 million, up 67% year-over-year. The company originated 240,706 loans during the quarter (up 102% year-over-year), with total originations exceeding $2.1 billion. Adjusted EBITDA reached $42.6 million, compared to a loss of $20.3 million in Q1 2024, and the adjusted EBITDA margin increased to 20% from -16% in the previous year.
On May 6, 2025, Upstart Holdings, Inc. (NASDAQ:UPST) announced a $1.2 billion forward-flow commitment with Fortress Investment Group. The latter has agreed to purchase up to $1.2 billion of consumer loans originated on the Upstart platform through March 2026. Additionally, on April 30, 2025, Lake Trust Credit Union, which serves 200,000 members across Michigan with over $2.5 billion in assets, announced its partnership with Upstart (NASDAQ:UPST) to offer personal loans to more consumers. Lake Trust began lending as a partner on the Upstart Referral Network in January 2025.
Despite these positive developments, Citi analysts recently reduced their price target for Upstart Holdings, Inc. (NASDAQ:UPST) to $83 from $108, while maintaining a Buy rating. The revision, Citi notes, is based on the “uncertainties related to the macroeconomic environment in the second half of 2025 and the current risk-averse sentiment in the market.”
3. NVIDIA Corporation (NASDAQ:NVDA)
Two Sigma Advisors Stake Value: $1,230,861,853
Upside Potential as of May 8: 40.30%
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA) is the world’s leading designer of graphics processing units (GPUs) and the dominant provider of chips powering the AI revolution. The company’s products span gaming, professional visualization, data centers, and automotive markets.
The semiconductor giant, currently valued at $2.86 trillion (May 8, 2025), is reeling from the effects of the ongoing trade restrictions. On May 6, 2025, CEO Jensen Huang expressed concerns about being locked out of China’s AI market. He estimated that the market could reach $50 billion in the next two to three years and that it’s a “tremendous loss” missing out on it. Last month, the Trump administration restricted the shipment of NVIDIA Corporation’s (NASDAQ:NVDA) H20 chips to China without a license, leading to a $5.5 billion quarterly charge.
Adding to the complexity, on May 7, 2025, Bloomberg reported that the Trump administration plans to rescind some Biden-era AI chip curbs. However, the government will maintain measures targeting China, potentially reshaping global semiconductor trade restrictions. Despite these headwinds, institutional investors continue to show strong interest in NVIDIA Corporation (NASDAQ:NVDA). ARK Invest recently purchased 107,661 shares valued at $12,223,829.
On May 5, 2025, Piper Sandler reaffirmed its Overweight rating on NVIDIA Corporation (NASDAQ:NVDA) stock, maintaining a $150.00 price target. The firm cited a sensitivity analysis that it did on NVIDIA’s (NASDAQ:NVDA) data center revenues to assess the potential impacts of a capital expenditure slowdown. It found that approximately 6.45% of the company’s total data center revenue could be at risk, potentially affecting earnings per share by roughly $0.40.
2. Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH)
Two Sigma Advisors Stake Value: $197,843,116
Upside Potential as of May 8: 41.71%
Number of Hedge Fund Holders: 58
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is one of the world’s leading cruise ship operators. The company owns and manages a fleet of ships under three brand names: Norwegian Cruise Line, Oceania Cruises, and Regent Seven Seas Cruises. Each brand offers unique vacation experiences at sea.
In Q1 2025, Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) earnings performance was what management described as “solid.” The company’s total revenue was $2.1 billion, though it posted a GAAP net loss of $40.3 million and earnings per share of ($0.09). However, the adjusted EBITDA reached $453 million, exceeded guidance, and adjusted EPS was $0.07. Despite some softening in its 12-month forward booking position, the company maintained its full-year 2025 adjusted EBITDA ($2.72 billion) and adjusted EPS ($0.01) guidance. Norwegian Cruise Line is expanding its fleet and offerings, introducing Norwegian Aqua, its first Prima Plus Class ship. It also refurbished Norwegian Bliss and Norwegian Breakaway and plans to enhance amenities at Great Stirrup Cay, its private island in the Bahamas.
On May 1, 2025, Loop Capital lowered its price target on Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) to $24 from $25 but maintained a Buy rating. The firm cited the 30% pullback in the stock year-to-date but expressed a favorable view of the entire cruise industry, suggesting that market share gains in the $2 trillion global vacation market would be even more likely in a recession.
1. FTAI Aviation Ltd. (NASDAQ:FTAI)
Two Sigma Advisors Stake Value: $188,029,816
Upside Potential as of May 8: 62.71%
Number of Hedge Fund Holders: 54
FTAI Aviation Ltd. (NASDAQ:FTAI) is a commercial aviation company. It leases and manages aircraft engines and related assets. The company operates through two primary segments: aerospace products and leasing.
FTAI Aviation Ltd. (NASDAQ:FTAI) reported mixed results in its Q1 2025 earnings. The company’s EPS was $0.87, just a few cents short of the forecasted $0.97. Revenue also came in slightly below expectations at $502.08 million against a forecast of $502.31 million. Despite these misses, FTAI Aviation’s (NASDAQ:FTAI) operational performance was solid. Adjusted EBITDA increased by 64% compared to the previous year, reaching $268.6 million. Following the earnings release, the company’s stock dipped 0.57% in premarket trading.
According to management, FTAI Aviation Ltd. (NASDAQ:FTAI) is focused on expanding its production capacity and pursuing strategic acquisitions to drive future growth. CEO Joe Adams highlighted the company’s strategic advantage during the earnings call, stating, “We’re able to acquire these facilities at less than replacement cost, and then fill them with our own engines.” COO David Marino emphasized their value maximization strategy, noting, “We’re sourcing these parts unserviceable from asset owners and airlines… we can maximize the value through our repair network.”
On May 5, 2025, Benchmark analysts maintained a Buy rating and a $300.00 price target for FTAI Aviation Ltd. (NASDAQ:FTAI). The move came after the disclosure of insider purchases by company executives. The analysts view the transactions as a sign of leadership’s confidence in the company’s strategic plan and growth potential.
While we acknowledge the potential of FTAI Aviation Ltd. (NASDAQ:FTAI) as an investment, 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 FTAI but that trades at less than 5 times its earnings check out our report about this cheapest AI stock.
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