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Top 10 Mega-Cap Stocks to Buy According to Hedge Funds

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Despite dominating headlines and market caps, mega-cap stocks may be the most overlooked sector by active managers today. According to a recent Morgan Stanley note, mega-cap tech companies are now the most under-owned group relative to their weighting in the major indices among actively managed funds in over 16 years.

In an interview on CNBC on August 19, Morgan Stanley analyst Erik Woodrink said, “Most of the mega-caps are generally underowned.” The gap between the portfolio weightings and the representation in the S&P 500 of these stocks has significantly expanded. This has created a massive opportunity, according to Morgan Stanley. The firm noted that “mega-cap tech is underowned by about 140 basis points,” up from 115 basis points just a quarter earlier.

The Mag 7 stocks ex-Tesla are trading at an average forward P/E ratio of 26.76, which is reasonable, considering the premium they command. This holds true for mega-cap stocks across the board, which are trading at historically lower valuations. In this article, we’ll dive into the top 10 mega-cap stocks to buy according to hedge funds.

Our Methodology

To identify the top 10 mega-cap stocks to buy according to hedge funds, we used Finviz’s screener to choose stocks with at least a market cap of $200 billion, in order to include only mega caps. Additionally, we included only those mega-cap stocks that had an upside of at least 15%. We sorted the final list in ascending order of hedge fund sentiment as of Q2 2025.

Note: All data was recorded on September 3, 2025.

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).

Top 10 Mega-Cap Stocks to Buy According to Hedge Funds

10. Costco Wholesale Corporation (NASDAQ:COST)

Average Analyst Upside: 15.54%

Number of Hedge Fund Holders: 91

Market Cap: $419.73 billion

Costco Wholesale Corporation (NASDAQ:COST) is one of the top 10 mega-cap stocks to buy according to hedge funds. On August 28, Telsey Advisory maintained its Outperform rating on Costco Wholesale Corporation (NASDAQ:COST), while setting a price target of $1,100. As of September 3, the stock was trading at $945.18, meaning the firm’s implied upside for the stock is a solid 16.37% for the next twelve months.

Analysts cited the company’s membership-based model as a key driver of stable revenue growth. That translated into membership fee income growth of  10.4% year-over-year in Q3 of Fiscal Year 2025. The company reported a renewal rate of 92.7% in the U.S. and Canada and 90.2% globally during the quarter.

Costco’s revenue has grown at a compounded annual rate of 11.1% over the last four years, while improving its net margin from 2.4% to 2.9% in that period. Telsey is only one of the many admirers of the stock. Out of the 36 Wall Street analysts tracking the stock, 21 rate it as a Strong Buy or a Buy, while 14 think it’s a Hold, and only one analyst rates it a Strong Sell. The stock does command a premium, though, as it trades at a lofty forward P/E ratio of 52.29x.

9. Merck & Company, Inc. (NYSE:MRK)

Average Analyst Upside: 20.25%

Number of Hedge Fund Holders: 92

Market Cap: $210.18 billion

Merck & Company, Inc. (NYSE:MRK) is one of the top 10 mega-cap stocks to buy according to hedge funds. On September 2, Merck & Company (NYSE:MRK) shared early results from a study called CORALreef Lipids. This study tested a new medicine named enlicitide decanoate.

It’s a pill you take once a day to help adults with high cholesterol. The study showed the medicine worked well; it lowered Low-Density Lipoprotein (LDL), also known as bad cholesterol, and other fats in the blood more than a fake pill called a placebo. They checked this after 24 weeks.

What’s also important is that the medicine seems safe. People taking it didn’t have more side effects than those taking the placebo. If the drug gets approved, it could be a lot easier for patients because it’s a pill, not a shot. While shots have been efficient, they have faced adoption challenges

Merck plans to show these results to health authorities worldwide and talk about them at future meetings. This study is part of a bigger effort called the CORALreef program. It tries to help many people who still can’t get their cholesterol under control, even with medicine.

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AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

AI is eating the world—and the machines behind it are ravenous.

Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. In fact, AI is already pushing global power grids to the brink.

Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:

Where will all of that energy come from?

AI is the most electricity-hungry technology ever invented. Each data center powering large language models like ChatGPT consumes as much energy as a small city. And it’s about to get worse.

Even Sam Altman, the founder of OpenAI, issued a stark warning:

“The future of AI depends on an energy breakthrough.”

Elon Musk was even more blunt:

“AI will run out of electricity by next year.”

As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes. Power grids are strained. Electricity prices are rising. Utilities are scrambling to expand capacity.

And that’s where the real opportunity lies…

One little-known company—almost entirely overlooked by most AI investors—could be the ultimate backdoor play. It’s not a chipmaker. It’s not a cloud platform. But it might be the most important AI stock in the US owns critical energy infrastructure assets positioned to feed the coming AI energy spike.

As demand from AI data centers explodes, this company is gearing up to profit from the most valuable commodity in the digital age: electricity.

The “Toll Booth” Operator of the AI Energy Boom

  • It owns critical nuclear energy infrastructure assets, positioning it at the heart of America’s next-generation power strategy.
  • It’s one of the only global companies capable of executing large-scale, complex EPC (engineering, procurement, and construction) projects across oil, gas, renewable fuels, and industrial infrastructure.
  • It plays a pivotal role in U.S. LNG exportation—a sector about to explode under President Trump’s renewed “America First” energy doctrine.

Trump has made it clear: Europe and U.S. allies must buy American LNG.

And our company sits in the toll booth—collecting fees on every drop exported.

But that’s not all…

As Trump’s proposed tariffs push American manufacturers to bring their operations back home, this company will be first in line to rebuild, retrofit, and reengineer those facilities.

AI. Energy. Tariffs. Onshoring. This One Company Ties It All Together.

While the world is distracted by flashy AI tickers, a few smart investors are quietly scooping up shares of the one company powering it all from behind the scenes.

AI needs energy. Energy needs infrastructure.

And infrastructure needs a builder with experience, scale, and execution.

This company has its finger in every pie—and Wall Street is just starting to notice.

Wall Street is noticing this company also because it is quietly riding all of these tailwinds—without the sky-high valuation.

While most energy and utility firms are buried under mountains of debt and coughing up hefty interest payments just to appease bondholders…

This company is completely debt-free.

In fact, it’s sitting on a war chest of cash—equal to nearly one-third of its entire market cap.

It also owns a huge equity stake in another red-hot AI play, giving investors indirect exposure to multiple AI growth engines without paying a premium.

And here’s what the smart money has started whispering…

The Hedge Fund Secret That’s Starting to Leak Out

This stock is so off-the-radar, so absurdly undervalued, that some of the most secretive hedge fund managers in the world have begun pitching it at closed-door investment summits.

They’re sharing it quietly, away from the cameras, to rooms full of ultra-wealthy clients.

Why? Because excluding cash and investments, this company is trading at less than 7 times earnings.

And that’s for a business tied to:

  • The AI infrastructure supercycle
  • The onshoring boom driven by Trump-era tariffs
  • A surge in U.S. LNG exports
  • And a unique footprint in nuclear energy—the future of clean, reliable power

You simply won’t find another AI and energy stock this cheap… with this much upside.

This isn’t a hype stock. It’s not riding on hope.

It’s delivering real cash flows, owns critical infrastructure, and holds stakes in other major growth stories.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.

As an investor, you want to be on the side of the winners, and AI is the winning ticket.

The Talent Pool is Overflowing: The world’s brightest minds are flocking to AI.

From computer scientists to mathematicians, the next generation of innovators is pouring its energy into this field.

This influx of talent guarantees a constant stream of groundbreaking ideas and rapid advancements.

By investing in AI, you’re essentially backing the future.

The future is powered by artificial intelligence, and the time to invest is NOW.

Don’t be a spectator in this technological revolution.

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A New Dawn is Coming to U.S. Stocks

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.

Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…

But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…