In this article, we discuss the 5 safe tech stocks to consider for retirement. If you want to read our detailed analysis of these stocks, go directly to the Retirement Stock Portfolio: 10 Safe Tech Stocks To Consider.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 120
Apple Inc. (NASDAQ:AAPL) recently crossed $3 trillion in market capitalization, becoming the first company in the world to do so. Despite the achievement, market experts believe there is still a lot of room for Apple Inc. (NASDAQ:AAPL) to grow. Famous investors like Warren Buffett hold large stakes in Apple Inc. (NASDAQ:AAPL) as it ventures into virtual reality and autonomous driving while steadily taking the smartphone business forward as well. Apple Inc. (NASDAQ:AAPL) has registered nine consecutive years of dividend growth.
Apple Inc. (NASDAQ:AAPL) is one of the most popular stocks among hedge funds. At the end of the third quarter of 2021, 120 hedge funds in the database of Insider Monkey held stakes worth $146 billion in Apple Inc. (NASDAQ:AAPL).
In its Q1 2021 investor letter, Distillate Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple is an even more notable situation and one that highlights our free cash valuation methodology and bears further discussion given its Q3 ‘20 sale from our strategy. For an extended period, Apple was extraordinarily inexpensive on a free cash flow basis and was the largest position in our strategy, exceeding 5% of the portfolio.”
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 156
Alphabet Inc. (NASDAQ:GOOG) is the parent company of Google, the most famous search engine in the world. Over the years, Alphabet Inc. (NASDAQ:GOOG) has diversified into a large tech firm with stakes in the cloud, video sharing, and software businesses. Cowen analyst John Blackledge has an Outperform rating on Alphabet Inc. (NASDAQ:GOOG) stock with a price target of $3,500. The analyst believes that Alphabet Inc. (NASDAQ:GOOG) will continue to offer investors the highest return on investment for the near future in the digital ads business.
Major hedge funds are also bullish on Alphabet Inc. (NASDAQ:GOOG) as a new fiscal year begins. Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG) with 2.9 million shares worth more than $7.8 billion.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“Large-cap tech companies have been resilient through the pandemic—Alphabet among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”
3. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 242
Amazon.com, Inc. (NASDAQ:AMZN), which already owns the largest ecommerce business in the world, has a long history of aggressive and successful investments in other sectors. In the past two decades, Amazon.com, Inc. (NASDAQ:AMZN) has built large publishing, web services, and streaming businesses. In the coming years, analysts expect Amazon.com, Inc. (NASDAQ:AMZN) to become an important name in the food, health, and fintech sectors as well. On January 11, JPMorgan analyst Doug Anmuth named Amazon.com, Inc. (NASDAQ:AMZN) as a “strong favorite” to be the best-performing stock among large tech companies in 2022.
Top hedge funds hold large stakes in Amazon.com, Inc. (NASDAQ:AMZN) and have consistently backed it to deliver solid returns over the long-term. Chicago-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. (NASDAQ:AMZN) with 3.9 million shares worth more than $12.8 billion.
In its Q1 2021 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ:AMZN) was one of them. Here is what the fund said:
“Amazon (AMZN):We sold our last remaining stake in Amazon this quarter. Amazon was our longest-running investment holding, after having originally purchasing it at the inception of Hayden in 2014, at a price of ~$317.
I gave some details of how Amazon has progressed over these past 6.5 years in last year’s Q2 2020 letter, which partners can find here (LINK). The company has executed amazingly well over this tenure, with revenues up ~3.3x and since our initial purchase, and reported operating income up ~30x over that period.
Generally, I believe there are three reasons to sell an investment:1) we recognize our initial thesis is wrong (sell out as quick as possible), 2) we have a significantly higher returning opportunity to redeploy the capital into (sell-down to fund the new investment), or 3) the company is maturing and hitting the top part of it’s S-curve / business lifecycle, so the business has fewer places to reinvest its capital internally. As such, the future returns will likely be lower than the past. This investment thus becomes a “source of capital” in the future, as we fund earlier-stage investment opportunities.
In the case of Amazon, we decided to sell due to the third scenario. I’m sure Amazon will continue to generate value for shareholders and continue to keep pace with the broader technology sector. However, I’m just not confident it’s as attractive an investment as when we first invested.
With ~51% of US households having an Amazon Prime account (and with very low churn), each of these households continuing to increase their annual spend with Amazon, and few / no real competitors in sight, Amazon is a dominant force that will only continue to accrue value as consumers continue to move from offline to online purchases for their everyday needs. Likewise, the “cash-flow machine” of Amazon Web Services is in a similar position of strength, with AWS now having ~32% market share and continuing to grow at +30% y/y. Because of this, I think Amazon is probably one of the safest investments in the technology sector today.
So why did we decide to sell the investment then? Simply put, Amazon is …”read the entire letter here]
2. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 248
Despite rebranding and a lot of negative media attention in the past few months, hedge funds continue to hold Meta Platforms, Inc. (NASDAQ:FB) in high regard. At the end of the third quarter of 2021, 248 hedge funds in the database of Insider Monkey were long on Meta Platforms, Inc. (NASDAQ:FB) with stakes worth $38 billion. Fisher Asset Management is a leading shareholder in Meta Platforms, Inc. (NASDAQ:FB) with 7.5 million shares worth $2.5 billion.
Meta Platforms, Inc. (NASDAQ:FB) stands out among other tech giants since it owns and runs the largest social media platforms across the world, boasting a user base in the billions. Meta Platforms, Inc. (NASDAQ:FB) is now focusing more on the “metaverse” while advertising spend on social media platforms holds steady and future prospects look bright.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:FB) was one of them. Here is what the fund said:
“We continued to keep our learnings from 2020 in mind during the quarter as we sought to increase the up capture of the portfolio. We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks, including Facebook, while trimming our weighting to stable names, which now represent 47% of the portfolio. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 250
Microsoft Corporation (NASDAQ:MSFT) stock has been a hedge fund favorite for many years too, along with other tech giants. Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ:MSFT) with 25 million shares worth more than $7 billion.
Microsoft Corporation (NASDAQ:MSFT) has successfully transitioned to the cloud services business. On January 14, Bernstein identified Microsoft Corporation (NASDAQ:MSFT) stock as one of those most likely to emerge as a “winner” from the metaverse trend. Along with a solid growth profile, Microsoft Corporation (NASDAQ:MSFT) is also a good value option since the company has registered 17 consecutive years of dividend growth.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
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