In this article, we will take a look at the 7 new stock picks from Brad Gerstner’s portfolio.

Gerstner Expects More M&As in New Term

Strategists and investors are confident that the new administration will fuel the state of mergers and acquisitions in the United States. It is no surprise that renowned investor Brad Gerstner, founder and CEO of Altimeter Capital, believes the same. On November 6, Gerstner appeared in an interview on CNBC Television where he shared his expectations of the stock market.

Gerstner shares that the Republicans have been particularly critical of big tech companies and their “bundling powers” that happen to “crowd out startups” and “stifle innovation and startups.” He expects the new administration to scrutinize this trend heavily. He also adds that the true beauty of Silicon Valley lies in the innovation and technology bolstered by small tech and mergers and acquisitions.

Speaking of big tech, he suggests that these names have been cutting down on M&A deals and have instead directed their resources to stock repurchases, dividends, and onboarding new GPUs. He expects the new administration to alter the trend and loosen up the ability to do mergers and acquisitions.

Gertsner also suggests that the US market will be better off with a functioning mergers and acquisitions flow in Silicon Valley, which he refers to as the “heartbeat” of the place. He also shared his thoughts on the program, Invest America, which is expected to provide kids with $1,000 in seed money into investment accounts as soon as they are born. He has been working with leading lawmakers in the country to promote the program and is highly optimistic about its outcomes.

Gerstner is bullish on the program and highlighted that the move will bring a new era of enterprise, innovation, and capital management to the US economy. He added that this program will bolster the private market and likely create 3.7 million new stock market investors yearly. In addition to investors like Brad Gerstner, many large tech companies are on board with the program.

Brad Gerstner is one of the top technology investors and has had many notable transactions over the past few years through his firm. He is bullish on tech and innovation, particularly artificial intelligence. In Q3 2024, he initiated 8 new positions and also raised his stakes in 7 stocks, ending the quarter with a portfolio of $6.75 billion in 13F securities. With that, let’s discuss his top new picks as of Q3 2024.

Brad Gerstner of Altimeter Capital

Our Methodology 

We scanned Altimeter Capital’s Q3 2024 portfolio and picked new additions from the fund’s top 13F holdings. Additionally, we’ve also added overall hedge fund sentiment, as of Q3 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Brad Gerstner Portfolio: Top 7 New Stock Picks

7. Lineage, Inc. (NASDAQ:LINE)

Altimeter Capital’s Stake Value: $31,352,000

Number of Hedge Fund Holders: 35

Lineage, Inc. (NASDAQ:LINE) ranks seventh on our list of Brad Gerstner’s new stock picks. It is one of the largest temperature-controlled warehousing and logistics companies in the world. Through its solutions, the company aims to fight food insecurity and manage waste worldwide.

The company demonstrates a strong commitment to expansion. During the third quarter of 2024, Lineage, Inc. (NASDAQ:LINE) launched a fully automated cold storage warehouse in Hazleton. This is the newest addition to the company’s portfolio and positions it as an emerging name in automated storage solutions. In addition to that, the company also has solid partnerships with some of the world’s biggest food and beverage producers, retailers, and distributors, helping LINE increase efficiency and minimize waste.

The company has a network of more than 480 facilities located across 84 million square feet in North America, Europe, and Asia Pacific. Overall, Lineage, Inc. (NASDAQ:LINE) raised nearly $5.1 billion in gross proceeds from its IPO in July this year, one of the largest IPOs in 2024. In addition to that, the company generated $1.3 billion in revenue during the third quarter of 2024, an increase of 0.5%.

Lineage, Inc. (NASDAQ:LINE) enjoys a prominent position in the industry and a vast network, explaining why 35 hedge funds were bullish on the stock at the close of Q3 2024.

6. Duolingo, Inc. (NASDAQ:DUOL)

Altimeter Capital’s Stake Value: $54,042,082 

Number of Hedge Fund Holders: 31

Duolingo, Inc. (NASDAQ:DUOL) is a mobile language learning platform operational across the globe. It offers courses in over 40 languages including Spanish, English, French, German, and Japanese to name a few. In the third quarter of 2024, Duolingo, Inc. (NASDAQ:DUOL) saw a 38% increase in total bookings and a 45% increase in subscription bookings. Total paid subscribers reached 8.6 million, up by 47% year-over-year. The company locked in a 54% increase in daily active users to reach 37.2 million and a 36% increase in monthly active users to reach 113.1 million. Overall, revenues generated during the quarter were $192.6 million, an increase of 40% from the same quarter in 2023.

The company has an element of fun that attracts users from across the globe. Its marketing strategy is unique and is built on interactions with customers seeking education and expanding into new avenues. To align with this strategy, on August 15, Duolingo, Inc. (NASDAQ:DUOL) announced a partnership with Sony Music to add popular and hit recordings to the music course on the Duolingo app. Previously in July, the company acquired Hobbes, an animation and motion design studio in Detroit. This will help the company facilitate a dedicated motion design team at Duolingo.

Overall, Brad Gerstner is bullish on DUOL. The company’s growth trajectory and key strategic decisions position it as an emerging leader in the education technology sector.

Baron Opportunity Fund stated the following regarding Duolingo, Inc. (NASDAQ:DUOL) in its Q3 2024 investor letter:

“Duolingo, Inc. (NASDAQ:DUOL) is the world’s leading language learning app with over 100 million monthly active users, known for its effective gamification and high engagement. After monitoring the company over the past year and a half, we developed conviction to buy the stock for a few reasons. The company has maintained premium levels of user growth (daily average user growth of over 50%) and revenue growth (40%-plus), executed well against their product roadmap, gained early traction with new functionality, and maintained impressive 40%-plus incremental margins. We view the founder-led management team as best in class, technically capable (CEO and CTO both earned PhDs in machine learning from Carnegie Mellon University), and product focused. We initiated a position in the quarter as the share price fell to what we deemed attractive levels from a long-term valuation perspective, coupled with material catalysts on the horizon, particularly the broader launch of AI functionality (branded “Max”) that enables users to have real-time conversations with AI based characters and a substantial improvement of the company’s Advanced English offering. We believe that these two initiatives take Duolingo from more of a hobby app to a company that can address the broader market of 1.8 billion people learning English today. As these products roll-out in the coming quarters, we believe their adoption should drive the realization of higher pricing, faster revenue growth, lower churn, and continued margin improvement. We also believe there is additional optionality in newer products such as math and music, which are earlier in their product evolution.”

5. Zillow Group, Inc. (NASDAQ:Z)

Altimeter Capital’s Stake Value: $54,628,783

Number of Hedge Fund Holders: 60

Zillow Group, Inc. (NASDAQ:Z) ranks fifth on our list of seven new picks of Brad Gerstner, as of Q3 2024. The company is a prominent real estate marketplace with a range of mobile applications and websites. More than 200 million visit the company’s websites and mobile applications every month.

The company is using technology to make finding affordable living options a reality. On November 19, Zillow Group, Inc. (NASDAQ:Z) announced that its real-time affordability tool, BuyAbility, can allow customers to swiftly find homes on the platform within their budgets, especially for first-time buyers. Previously in May, the company released its open-source Fair Housing Classifier. The tool establishes guardrails to nurture unbiased and responsible behavior in real estate conversations using LLMs.

In the third quarter of 2024, Zillow Group, Inc. (NASDAQ:Z) reported strong earnings, with revenue growing by 17% year-over-year. The company takes pride in its customer-centric strategy and unparalleled tech solutions. Traffic to the company’s websites and apps was 223 million average monthly unique users and visits were nearly 2.4 billion in Q3 2024. Overall, Zillow Group, Inc. (NASDAQ:Z) is an emerging leader in the real estate space with its disruptive technologies and growing use of artificial intelligence and machine learning.

4. Futu Holdings Limited (NASDAQ:FUTU)

Altimeter Capital’s Stake Value: $55,070,488

Number of Hedge Fund Holders: 29

Futu Holdings Limited (NASDAQ:FUTU) is a financial technology company based in Hong Kong. The stock is a new addition to Brad Gerstner’s portfolio, as of Q3 2024. The company operates a fully digitized brokerage platform, Futubull, that offers market data, financial news, interactive social features, and investor education. Its subsidiaries provide trading and clearing services for the United States, Hong Kong SAR, China Connect, Singaporean, Australian, Japanese, Canadian, and Malaysian stocks.

The company holds over 100 licenses and qualifications from across the globe. In July, Futu Holdings Limited (NASDAQ:FUTU) announced a license uplift allowing the company to provide virtual asset dealing in Hong Kong. During the same month, the company’s wealth management subsidiary surpassed $10 billion in assets under management, and in July the company announced a HKD 440 million investment in Airstar Bank.

In the third quarter of 2024, Futu Holdings Limited (NASDAQ:FUTU) saw a 33% increase in total paying clients and a 23% increase in registered clients. Overall, total users grew by 14.4%, and client assets by 48%. The third quarter has been exemplary for FUTU, given that trading volume increased by nearly 75% to reach HKD1.9 trillion.

According to the company’s chairman and chief executive officer, the company acquired another 154,000 paying clients, with Hong Kong and Singapore making up more than one-third of them. The company claims to continue optimizing its client acquisition channels and marketing campaigns in the two markets. Analysts are also bullish on the stock and their median price target represents an upside of 33% from current levels.

3. Broadcom Inc. (NASDAQ:AVGO)

Altimeter Capital’s Stake Value: $68,464,388

Number of Hedge Fund Holders: 128

Broadcom Inc. (NASDAQ:AVGO) ranks third on our list of the 7 new stock picks by Brad Gerstner. He trimmed his position in NVIDIA slightly and added AVGO to his portfolio. It designs and develops a range of semiconductor products and is well known for making application-specific integrated circuits (ASICs). It also provides infrastructure software products. Some of its products include cable modems, networking processors, and storage adapters. The company serves the data center, networking, software, broadband, storage, and wireless markets.

Throughout the year, the company has launched crucial breakthrough technology for AI tasks and AI systems. On November 5, the company announced the launch of VeloRain, an AI and ML platform that enhances AI security workloads. On the same day, Broadcom Inc. (NASDAQ:AVGO) unveiled a private cloud platform, part of its VMware Cloud Foundation, improving AI autonomy and security for its customers.

Attributable to its growing stakes in AI, the company expects revenue from AI to increase 10% from the previous quarter to reach $3.5 billion. This will bring the full-year total to $12 billion. Similarly, in the third quarter of 2024, Broadcom Inc. (NASDAQ:AVGO) saw a 47% increase in consolidated revenue and a 44% increase in net income.

AVGO’s performance and growing importance in the AI sector explain why hedge funds are bullish on the stock. At the end of the third quarter of 2024, 128 hedge funds were bullish on the stock, according to Insider Monkey’s database.

ClearBridge Investments’ ClearBridge Large Cap Value Strategy stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q3 2024 investor letter:

“In IT, we bought Broadcom Inc. (NASDAQ:AVGO) as we believe the company has a long runway for growth with its custom silicon business, which should be more durable and less volatile than other components within the AI food chain. We also believe the acquisition of VMware creates another opportunity for steady, subscription-based durable growth that is still in its early innings. We believe the stock has an attractive risk/reward profile given the reasonable visibility toward mid-teens EPS growth at a low-20s P/E multiple. We made room for Broadcom by exiting Lam Research, whose shares we believed priced in a full recovery, while we grew increasingly concerned that China exposure might create an air pocket.”

2. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Altimeter Capital’s Stake Value: $90,185,094 

Number of Hedge Fund Holders: 158

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a semiconductor company that makes chips for technology giants like NVIDIA and AMD. TSM attributes its revenue growth to the increasing demand for artificial intelligence. In the third quarter of 2024, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) logged revenue worth $23.7 billion (NT$759.69 billion) and net income worth $10.13 billion (NT$325.26 billion), up by 39% and 54.2% year-over-year, respectively.

In addition to the company’s solid financial growth, TSM is also working to penetrate new markets. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) recently established a joint venture with some partners in Germany and also accelerated its partnership with Amkor to improve packaging facilities in Arizona.

Overall, TSM expects its four-year revenue to increase by nearly 30% due to the growing demand for artificial intelligence. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) also plans to spend nearly $32 billion to $40 billion in capital expenditures in 2024 and expects revenue from AI chips to grow at a compound annual growth rate (CAGR) of 50% by 2027.

Baron Global Advantage Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q3 2024 investor letter:

“We established a small position in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). Morris Chang founded TSMC in 1987, as the world’s first dedicated semiconductor foundry. Until then, semiconductor chips were always designed and manufactured by the same company. TSMC introduced a groundbreaking new business model, in which it acted purely as a contract manufacturer, which proved to be highly successful. TSMC maintained a focus on improving its manufacturing process technology and enabled the emergence of innovative fabless design companies, including NVIDIA, Apple, and Qualcomm, who became TSMC’s key customers. Today, TSMC has a more than 60% share of the total semiconductor foundry market and over 90% share in leading-edge manufacturing. TSMC enjoys high barriers to entry given the ever-increasing cost and technological complexity of semiconductor manufacturing while benefiting from economies of scope as once leading-edge manufacturing becomes lagging edge on fully depreciated equipment. TSMC also benefits from scale– higher profits lead to higher R&D and capex investments, allowing for further technological differentiation, resulting in more profits. We believe TSMC will sustain strong double-digit earnings growth for years to come, driven by continued market share gains, strong pricing power, and structural growth in AI demand. According to C.C. Wei, TSMC’s CEO, “almost all the AI innovators are working with TSMC to address the insatiable AI-related demand.”6 Management forecasts that revenue from server AI chips, such as GPUs and other AI accelerators, will grow at a 50% CAGR from 2022 to 2028 and account for more than 20% of TSMC’s revenue by 2028. We except further long-term upside from the eventual proliferation of edge AI devices, including AI smartphones and AI PCs, which will require significantly more computing power and drive even stronger demand for TSMC’s leading-edge technology.”

1. Tesla, Inc. (NASDAQ:TSLA)

Altimeter Capital’s Stake Value: $173,303,712

Number of Hedge Fund Holders: 99

Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company specializing in producing electric cars and solar-integrated renewable energy solutions. The company is one of the largest EV manufacturers in the United States and is a new addition to Brad Gerstner’s portfolio.

In the third quarter of 2024, Tesla, Inc. (NASDAQ:TSLA) logged revenue worth $20.02 in automotive revenues. Previously, Tesla, Inc. (NASDAQ:TSLA) launched a new lineup of electric vehicles to boost the launch of new models. Its latest lineup and extensive production line will deliver over 3 million cars of capacity at full optimization.

Tesla, Inc. (NASDAQ:TSLA) is one of Brad’s favorite stocks, and he attributes his likeliness to the level of innovation the stock exhibits. He also believes that “2025 will be Tesla’s ChatGPT year.” He previously appeared on CNBC in May where he emphasized Tesla’s groundbreaking technology and how it is highly challenging to replicate. More recently, on November 21, he again joined CNBC emphasizing that the year 2025 will be the year for Tesla’s Robotaxi. He also added that with the new administration in play, the optics for Uber are going to be extremely tough, and quite the opposite will be the case for Tesla.

Overall, Gerstner is extremely bullish on Tesla because of its disruptive technology. 99 hedge funds were bullish on the stock at the end of Q3 2024, according to Insider Monkey’s database.

While we acknowledge the potential of TSLA to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. 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.