We recently published a list of 10 Best Major Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Visa Inc. (NYSE:V) stands against other best major stocks to buy according to hedge funds.
After a notable growth of 25% for the broader market in 2024, the S&P 500 index gained a little under 4% in the first month of 2025. The stock market had a mixed start to 2025 after the U.S. tech companies took a massive hit from the launch of Deepseek’s R1 AI model. Despite a major blow, the tech-heavy NASDAQ 100 index has gained over 4.50% year-to-date.
READ ALSO: 10 Large-Cap Stocks Insiders Are Selling Recently
Inflation and Tariff Concerns
U.S. stocks fell on February 12 following the release of January inflation data. The consumer-price index (CPI) soared 3% in January from a year ago, exceeding economists’ estimates. The data has somewhat stoked investors’ concerns about price pressures and the worry that interest rates might not come down as expected.
January CPI usually indicates big price adjustments made by businesses at the start of the year. Moreover, the beginning of a new administration has an impact on businesses. According to Goldman Sachs Research’s chief US equity strategist David Kostin, every five-percentage-point increase in the US tariff rate is estimated to reduce S&P 500 EPS by roughly 1-2%.
Therefore, if the U.S. administration sustains the proposed tariff rates, a 25% tariff on imported goods from Mexico and Canada and an additional 10% tariff on imports from China would reduce S&P 500 EPS forecasts by nearly 2-3%, as per Goldman’s Research.
However, the tariff policy doesn’t slow down the AI investment by the U.S. tech giants as they continue to expand their AI-related services and products. Four out of the Big Five companies are projected to invest over $300 billion in 2025 building data centers to fuel the AI boom.
Our Methodology
We have listed the top 10 best major stocks based on hedge fund sentiment, according to Insider Monkey’s database. The best major stocks are ranked in ascending order of the number of hedge fund holders, as of Q3 2024.
Why do we care about what hedge funds do? 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).
A close-up of a modern payments terminal with a pile of credit cards on the side.
Visa Inc. (NYSE:V)
No. of Hedge Fund Holders: 165
Visa Inc. (NYSE:V) is a multinational payment card service company that offers a wide range of related services and products to its consumers. The company’s growth is largely driven by the global shift towards digital payments, a trend fueled by technological advancements. According to the Federal Reserve, cash use plunged to 16% of transactions in 2024, indicating the growing preference for digital payments. The newer generation prefers digital payments, thus driving growth for card payment service providers.
On February 3, Barclays analyst Ramsey El-Assal raised the price target on V shares from $361 to $396, maintaining an Overweight rating on the stock. The analyst upgraded the price target on Visa shares following another strong quarter. In fiscal Q1 2025, the company posted $9.5 billion in revenue, up by 10% year-over-year. Visa Inc. (NYSE:V) processed 63.8 billion transactions in Q1 FY2025, reflecting an 11% growth from a year ago. Visa’s payment volume also experienced a 9% year-over-year increase on a constant-dollar basis.
Visa dominates the card market and continues to have a strong cash position. By the end of Q1, the company had over $16 billion in cash and cash equivalents, while operating cash flow reached $5.4 billion, up from $3.6 billion in Q1 FY2024. During the quarter, the company returned over $5.11 billion to shareholders through dividends and share buybacks.
Overall, V ranks 6th on our list of best major stocks to buy according to hedge funds. While we acknowledge the potential of V to grow, our conviction lies in the belief that 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 V but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.