In this article, we will discuss: 10 Best Cash App Stocks To Buy According to Hedge Funds.
The mobile payment service Cash App has grown significantly throughout the years, and in 2022 it was valued at $138 billion, up from $40 billion in 2020. Although its earnings increased to $2.95 billion, showing consistent yearly growth since 2018, its revenue decreased to $10.6 billion in 2022 from $12.3 billion in 2021, despite this remarkable valuation. Cash App’s user base grew by 7 million from 2021 to 51 million in 2022, due to its user-friendly interface and array of financial services, which include peer-to-peer payments, Bitcoin investments, and cash card features. The four U.S. states of Texas, California, Florida, and New York together account for 48.75% of Cash App’s user base, with over half of its customers concentrated in these states. As of 2020, there were just 10,000 active Android users in the United Kingdom, and its market share was less than 0.05%. In 2022, the platform handled more than 528 million transactions, demonstrating its increasing use. Cash App is positioned as a major participant in the digital payment ecosystem, particularly in the U.S. market, due to its excellent features and rising profitability.
As per findings by Apptopia, Cash App was the most downloaded payment app between April and May 2020, with a 20.1% increase in U.S. downloads, reaching around 4 million within that time frame. Additionally, usage increased, with roughly 250 million sessions in April—the second-highest number among payment applications. As people looked for alternatives to in-person banking and provided financial support to friends and family, the pandemic caused a shift toward digital transactions, which is what is responsible for this surge.
According to Block, Cash App’s parent company, in a manner that many financial institutions have not been able to, Cash App has expanded access to the financial system and enabled a wide range of consumers to send, spend, save, invest, and comprehend their money more effectively. Its goal is to “redefine the world’s relationship with money by making it more relatable, instantly available, and universally accessible,” which is in line with this. Block believes Cash App can keep improving the economy both today and in the future.
However, Cash App has also faced challenges. Recently, under Jack Dorsey’s leadership, Block agreed to a $175 million settlement with the CFPB, which included a $55 million fine and up to $120 million in reimbursements for Cash App users. Allegations of widespread fraud and insufficient customer service on the platform were addressed in the settlement. The CFPB charged Cash App with facilitating fraud, sending users to banks, and neglecting to look into questionable transactions. Cash App accounted for over half of Block’s 2023 gross profit, with over 56 million accounts. In addition, after 48 state regulators joined together, Block paid an $80 million fine for money laundering violations.
The press release stated:
“While we strongly disagree with the CFPB’s mischaracterizations, we made the decision to settle this matter in the interest of putting it behind us and focusing on what’s best for our customers and our business,”
With that said, here are the 10 Best Cash App Stocks To Buy According to Hedge Funds.
People using the Cash App paying for goods and services, highlighting the impact the of the company’s payment tools.
Methodology
For this article, we reviewed multiple reliable websites and videos that discuss stocks available on Cash App. From there, we formed an initial list of the 20 Best Cash App Stocks To Buy According to Hedge Funds. From the resultant dataset, we chose 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 900 hedge funds in Q3 2024 to gauge hedge fund sentiment for stocks.
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)
10. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 56
One of the Best Cash App Stocks, Shopify Payments is a payment platform run by Shopify Inc. (NYSE:SHOP), a Canadian e-commerce firm. This allows Shopify store owners to accept payments online without using third-party services.
Leading e-commerce company invests 17% to 22% of net revenues on research and development to spur innovation. Insiders own 6–7% of Shopify Inc. (NYSE:SHOP)’s total shares, which is in line with the interests of shareholders. The company has a variety of revenue streams, including robust development in its B2B division.
Shopify Inc. (NYSE:SHOP) exhibits competitive strength and consistent market share growth with a three-year revenue CAGR of 26%. Long-lasting brand loyalty and consumer trust are strengthened by its high retention rates and excellent customer satisfaction indicators, such as a high Net Promoter Score (NPS).
Shopify Inc. (NYSE:SHOP) has progressively recovered despite a stock loss of 80% in 2022, helped by advancements in strategic metrics. Diversification into Shopify Plus and B2B solutions has increased its attach rate while preserving its pricing advantage over rivals like Amazon.
Following five quarters of growth of 20% or more, the company’s gross merchandise value (GMV) increased by 24% in the third quarter of 2024. International growth, an increase in offline sales, and the addition of new merchants were the main drivers of this. This expansion was facilitated by several AI-driven projects.
Cantor Fitzgerald increased the Shopify Inc. (NYSE:SHOP) price target from $110 to $120. The analyst informed investors in a research note that the basic backdrop for Internet stocks is still favorable going into 2025, even in the face of new threats like tariffs, and that the rate of innovation in fields like artificial intelligence, autonomous vehicles, robotics, and quantum computing is quickening. The firm anticipates significant growth and margin increases in 2025 from digital advertisements, e-commerce, and mobility.
RiverPark Large Growth Fund stated the following regarding Shopify Inc. (NYSE:SHOP) in its Q3 2024 investor letter:
“Shopify Inc. (NYSE:SHOP): Shopify was a top contributor in the third quarter following a strong second quarter earnings report that included better than expected revenue growth and substantial margin expansion. Gross merchandise value (the value of all items sold on the platform) growth of 22% was three percentage points above investor estimates, revenue of $2.0 billion was $50 million better and free cash flow of $333 million was $80 million better. A combination of new merchants to the company’s platform, increased adoption of SHOP’s offerings by existing merchants, and e-commerce market share gains are driving this revenue growth and profitability.
Last year, 10% of US retail e-commerce sales flowed through SHOP, second only to Amazon, and the company is still enjoying significant tailwinds as retail merchants of all sizes adopt SHOP’s software tools to display, manage and sell their products across a dozen different sales channels. We believe that the overall growth of e-commerce, combined with the development of new products and services, such as its digital wallet Shop Pay, should continue to drive revenue growth of more than 20% per year over the next several years, accompanied by re-acceleration of operating margin growth and FCF generation.”
Peter Rathjens, Bruce Clarke And John Campbell’s Arrowstreet Capital was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 9.17 million shares worth $734.77 million as of Q3.
9. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 58
One of the Best Cash App Stocks, Sea Limited (NYSE:SE) began as Garena, a gaming company, before branching out into e-commerce in 2015. Despite some challenges in digital entertainment, the firm’s Q3 results showed significant growth throughout its core businesses, particularly e-commerce and digital financial services. With gross orders up 24%, e-commerce’s GMV grew 29% year over year (YoY) to $25.1 billion. Shopee maintained its dominance in Asia with a 20% YoY increase in monthly active purchasers, while active buyers in Brazil increased by over 40%. Shopee boosted ad revenue per seller by 25% year over year by increasing monetization through better ad technologies, higher commission rates, and market rationalization in Southeast Asia. As a result, the estimated marketplace take rate increased significantly from the prior year to 11.2%.
Sea Money, a division that provides digital financial services, announced a 73% YoY rise in the principal amount of its outstanding loans, which now stands at $4.6 billion. Furthermore, the company recruited four million new borrowers, increasing its active user base. Sea Money’s “low-and-grow” approach, which uses Shopee’s data for risk evaluations, has kept the non-performing loan ratio steady at 1.2%, establishing the platform as a reliable source of credit. Interestingly, more than half of Sea Money’s loans in Indonesia now take place outside of the Shopee ecosystem, indicating growing offline purchase use cases. In addition, regional development is planned.
Growth in GMV and loan business volume drove Sea Limited (NYSE:SE)’s overall revenue growth of 31% year over year to $4.33 billion, while its gross margin was stable at 43%. Deferred revenue adjustments caused a 16% drop in digital entertainment revenue, but the e-commerce and financial services categories made up for this with remarkable growth. Operating income increased 259% year over year to $202 million, showing Sea’s dedication to cost control and sales and marketing ROI.
SaltLight Capital stated the following regarding Sea Limited (NYSE:SE) in its Q3 2024 investor letter:
“Sea Limited (NYSE:SE), which is focused on Southeast Asia, has the wildly successful Free Fire game franchise, first launched in 2017.
Free Fire has an astounding 648 million quarterly active users and 53 million paying players, spending an average of $42 a year8 . The company’s large user base is due to its game design being playable on lower-spec phones, which are more prevalent in emerging markets. Nevertheless, the business makes good money overall. Over the last twelve months, SEA Ltd made $1bn EBITDA with 50% margins. This is a phenomenal business that doesn’t require much capex to grow.
Our view is that the market has underappreciated the annuity-like nature of these evergreen game franchise businesses. Tencent, in particular, is valued at a multiple that doesn’t appreciate the nature of the game business…” (Click here to read the full text)
8. Block Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 64
Block Inc. (NYSE:SQ) was established in 2009 and offers businesses payment services as well as associated services. A person-to-person payment network called Cash App was also introduced by the business. Square processed a little over $200 million in payments in 2023.
Block Inc. (NYSE:SQ) keeps establishing itself as a fintech leader due to its promising growth and solid financial results. The business reported a 19% year-over-year increase in gross profit to $2.25 billion in its most recent Q3 2024 financial release. The Square and Cash App areas both saw strong growth. Significant gains in adjusted operating income and EBITDA helped Block reach its highest quarterly profitability ever, leading to an upward revision of its full-year expectations for these metrics. This shows confidence in its operating plan and implementation.
The Cash App category continues to be a strong performer, with higher engagement and monetization resulting from improved attach rates for financial items like paycheck deposits. In 2025, expansion is anticipated to be further accelerated by investments in growth efforts, especially in go-to-market methods. However, challenges still exist. Cash App’s moderate monthly active user growth, which is expected to end the year at about 57 million, is a reflection of challenges with user acquisition. Block Inc. (NYSE:SQ) places a higher priority on platform health and engagement than on rapid user acquisition, thus this slowdown is partially purposeful. Future operations may also be impacted by regulatory concerns in the banking and fintech industries.
Short-term obstacles include the development of Cash App Borrow and the delays in enjoying the benefits of transaction costs, both of which are now anticipated to fuel growth beginning in 2025. The benefits of new products aren’t fully appreciated yet because their distribution is still in its early phases, like the Cash App Card’s collaboration with Afterpay.
On January 3, 2024, the stock jumped 5% after Raymond James upgraded it to Outperform. The bank set a price objective of $115 above the $91.20 price due to its favorable value.
In 2025, the bank expects Block Inc.’s (NYSE:SQ) seller gross payment volume (GPV) to increase by at least 10%. Raymond James expects the gross profit to continue to grow even if Cash App’s development has slowed.
Stephen Mandel’s Lone Pine Capital was the largest stakeholder in the company among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 7.67 million shares worth $514.92 million as of Q3.
7. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 66
A top supplier of software and payment processing solutions and one of the Best Cash App Stocks, Global Payments Inc. (NYSE:GPN) specializes in helping small and medium-sized businesses. The business has operations in 30 countries, with Europe and Asia accounting for almost one-fourth of its income. In 2019, the firm and Total System Services combined in an all-stock transaction, giving shareholders of Total System Services 48% of the combined business. Issuer processing operations were added by the transaction.
In Q3 of 2024, strong operational execution and profitability were shown by Global Payments Inc. (NYSE:GPN), which achieved a 6% adjusted net revenue increase, 40 basis points of adjusted operating margin expansion, and 12% adjusted earnings per share growth YoY. Strong success in POS, software, and integrated and embedded businesses fueled the Merchant Solutions segment’s 7% adjusted net revenue growth. A noteworthy 23% increase in cloud point-of-sale sales for new SMBs and mid-market businesses suggests that there is a high level of demand in this industry.
Global Payments Inc. (NYSE:GPN)’s expanding position in the education sector is demonstrated by the double-digit adjusted net revenue growth it achieved, which was bolstered by noteworthy collaborations with institutions such as Swansea University in Wales, Brown University, and the University of British Columbia.
Global Payments Inc. (NYSE:GPN) committed to concentrating on its core businesses by conclusively agreeing to sell its AdvancedMD business for $1.125 billion as part of its plan to reduce operations. The business successfully finished five implementations in the Issuer Solutions division, including the first cloud conversion for a significant international financial institution in the Asia Pacific area. More than 65 million accounts in the segment’s pipeline support its growth prospects.
Weitz Large Cap Equity Fund stated the following regarding Global Payments Inc. (NYSE:GPN) in its Q3 2024 investor letter:
“We continued to increase the Fund’s positions in Global Payments Inc. (NYSE:GPN) and Idex Corp. during the quarter. Both stocks trade at significant discounts to our business value estimates. The companies have fundamental catalysts that could drive the stocks, but the timetable may have slipped a bit. The challenge is that investors want results now, especially in a bull market. We have specific milestones to track, and we think their achievement can be measured in quarters rather than years. In our view, the potential payoffs are well worth the wait.”
6. Fiserv Inc. (NYSE:FI)
Number of Hedge Fund Holders: 71
One of the Best Cash App Stocks, Fiserv, Inc. (NYSE:FI) is a top supplier of core processing and ancillary services for US banks and credit unions, concentrating on small and midsize banks. These services include electronic funds transfers, payment processing, and loan processing. In 2019, the firm merged with First Data to offer retailers payment processing services as well. The company’s overseas revenue accounts for around 10% of its total revenue.
Fiserv, Inc. (NYSE:FI)’s adjusted profits per share rose 17% to $2.30, indicating solid revenue and earnings growth. The adjusted operating margin increased by 170 basis points to 40.2%, supported by a 15% increase in organic revenue, while adjusted revenue increased by 7%.
Clover, the company’s credit card processing business, achieved a 28% growth in sales, while value-added services reached a penetration rate of 21%. These factors contributed to a 24% organic revenue growth in the Merchant Solutions segment. The business revealed significant partnerships and projects, such as agreements with Walmart for real-time Pay by Bank transactions and DoorDash for embedded finance solutions. Along with the growth of Clover pilots in Brazil and Mexico, new features were introduced, including the enterprise commerce control center.
Organic revenue in the Financial Solutions category increased by 6%, driven by important wins such as Exxon signing on for a Data-as-a-Service offering and PNC implementing an AI-enabled fraud detection product.
Fiserv, Inc. (NYSE:FI) increased its 2024 estimate, showing confidence in its sustained good performance. It increased the expectations for organic revenue growth from 15%-17% to 16%-17% and adjusted EPS guidance to $8.73-$8.80.
Delaware Ivy Core Equity Fund stated the following regarding Fiserv, Inc. (NYSE:FI) in its Q3 2024 investor letter:
“Fiserv, Inc. (NYSE:FI) – Solid revenue and profitability trends drove price appreciation during the quarter. The payments-processing and bank technology company remains a reasonably valued alternative to capitalize on digital conversion of payments and technology migration in the banking industry.”
5. MercadoLibre Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 87
By the end of 2023, there were over 218 million active customers and 1 million active merchants in 18 countries using MercadoLibre, Inc. (NASDAQ:MELI)’s fintech solutions and commerce network, making it the largest e-commerce marketplace in Latin America. The firm runs several businesses that complement its main online store. Its turnkey e-commerce solution (Mercado Shops), shipping solutions (Mercado Envios), payment and financing operations (Mercado Pago and Mercado Credito), classified ads (Mercado Clics), and advertising are all part of its arsenal. The company’s revenue streams include advertising royalties, final value fees, subscription fees, insertion fees, payment processing, and interest income from loans to consumers and small businesses.
MercadoLibre, Inc. (NASDAQ:MELI) reported strong GMV growth in key markets in Q3 of 2024, with GMV rising 34% YoY in Brazil and 27% in Mexico, driven by improvements in market share in both countries. In order to prove its expanding client base, the firm also added a record 7 million new customers, exceeding the peak figures attained during the pandemic.
The business increased fulfillment penetration by 4.5 percentage points in Q3 by opening 6 new fulfillment centers for improved logistics. The company’s credit card business also saw tremendous growth, with 1.5 million new credit cards authorized and a 166% increase in the total payment volume (TPV) for credit cards year over year.
In Q3 of 2024, MercadoLibre, Inc. (NASDAQ:MELI)’s revenue increased by 35% over the previous year, and the company’s EBIT, which showed a 10.5% margin, was $557 million. The company also improved customer engagement and retention by introducing new tier options and the MELI+ benefits package to its loyalty programs.
Lakehouse Global Growth Fund stated the following regarding MercadoLibre, Inc. (NASDAQ:MELI) in its November 2024 investor letter:
“The Funds largest position, Latin American e-commerce leader MercadoLibre, Inc. (NASDAQ:MELI) delivered another impressive quarterly result. Net revenue grew 35% year-on-year to $5.3 billion, while operating profit declined 29% to $0.6 billion as management made the decision to reinvest some profits back into the business. This reinvestment was primarily to accelerate growth in the company’s credit offerings and continue the expansion of their logistics network, driving faster delivery times and lower per-unit shipping costs. Whilst such a move will depress margins in the near term, we don’t view it as a negative.
Building and owning a first-class logistics network is critical for the company’s success as it will ultimately help protect its market share and profits from competitors over the long-term. We also note that faster shipping accelerates sales growth, which in turn, fosters wider selection, better prices, and greater investment in logistics, all part of a virtuous cycle. As long-time MercadoLibre followers, we are more than happy for the company to make such long-term investments and continue to believe the company is in an ideal position to capitalise on the significant opportunities ahead and deliver many years of above average growth and margin expansion.”
4. PayPal Holdings Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 90
One of the Best Cash App Stocks, PayPal Holdings, Inc. (NASDAQ:PYPL), which specializes in online transactions, was split off from eBay in 2015. It provides businesses and people with electronic payment solutions. The company had 426 million active accounts by the end of 2023. The business is also the owner of the Venmo peer-to-peer payment network.
PayPal Holdings, Inc. (NASDAQ:PYPL) was able to establish and preserve a competitive edge by building a network of merchants and customers early in the development of e-commerce. In the past, the firm’s expansion has been pushed by the continuous transition to electronic payments and the emergence of e-commerce, which the coronavirus pandemic momentarily worsened. More recently, though, the company has faced significant challenges as the benefits of the pandemic have reversed and new competitors have emerged. In an effort to ease the strain on top-line growth, management has put more of an emphasis on cost reduction and product innovation, with the ultimate goal of moving toward more profitable growth.
The company’s revenue increased by 5.78% YoY in Q3 2024. PayPal Holdings, Inc. (NASDAQ:PYPL) showed steady growth and revenue, with revenue increasing 6% on a currency-neutral basis to $7.8 billion and total payment volume increasing 9% to $423 billion. Strong generation of free cash flow helped non-GAAP earnings per share jump 22% year over year. Innovative product launches were presented by the company, such as new mobile checkout experiences that increased conversion rates by up to 400 basis points for one-time checkout and 100 basis points for vaulted checkout. Furthermore, over one thousand retailers have embraced the Fastlane feature, which has improved customer experiences.
Venmo reported strong growth in Q3 of 2024, as evidenced by a 30% increase in monthly active debit card accounts and a 20% increase in monthly active Pay with Venmo customers. For the second consecutive quarter, Braintree recorded significant growth in transaction margin dollars, revealing its sustained excellent performance. The PayPal Everywhere campaign garnered great traction, with over 1 million new debit card users, indicating excellent adoption rates and the company’s expanding ecosystem.
Artisan Value Fund stated the following regarding PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q3 2024 investor letter:
“Our top contributor was PayPal Holdings, Inc. (NASDAQ:PYPL), a financial technology company that enables digital and mobile payments between consumers and merchants. PayPal was a recent new purchase added to the portfolio in Q2. Better growth in payment volumes and transaction margins during PayPal’s latest quarter offered evidence that the new management team’s efforts are gaining traction. Notably, payment service provider Braintree returned to providing positive transaction margin, branded checkout contributed strongly to payment volume growth, and monetization at Venmo showed progress. Post-COVID, PayPal’s shares had been pressured by intensifying competition, the threat of which was seemingly exacerbated by prior management missteps. Shares traded for under 14X next year’s expected earnings at the time of our initial purchase. This was an attractive entry point to purchase a stake in a business with above-average—and improving—unit economics, a strong balance sheet and consistent free cash flow. Competent new management is already leaning on the company’s strong financial position to maximize the value of these assets.”
3. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 115
One of the Best Cash App Stocks, Alibaba Group Holding Limited (NYSE:BABA) is the biggest online and mobile retailer in the world based on gross merchandise volume. It runs online marketplaces in China, including Tmall (business-to-consumer) and Taobao (consumer-to-consumer).
Alibaba Group Holding Limited (NYSE:BABA)’s most valued cash flow-generating operation is its China commerce retail branch. Other sources of income include local consumer services, cloud computing, digital media and entertainment platforms, Cainiao logistics services, international commerce retail and wholesale, China commerce wholesale, and innovation projects. AliPay, which enables digital payments through smartphones, is just one of the many services and products in its portfolio.
Overall, revenue increased 5.21% year over year in the second quarter of 2025. During the 11-11 Global Shopping Festival, Alibaba Group Holding Limited (NYSE:BABA) announced record-high monthly active customers on Taobao and Tmall, which significantly increased GMV. With a 29% increase in sales, the Alibaba International Digital Commerce (AIDC) division experienced strong growth, pushed mainly by cross-border business operations. The company’s innovation in AI technology was highlighted by the 7% growth in revenue in the cloud segment and the triple-digit growth in revenue from AI-related products for the sixth consecutive quarter. Alibaba’s focus on providing shareholder value is also shown by the successful execution of a share repurchase program, which witnessed its share buyback valued at $10 billion in the first half of the fiscal year, resulting in a 4.4% net drop in the number of shares.
On January 14, 2025, Sands China Ltd., Alipay, and Macau Pass launched the Alipay Tap! service at Sands Resorts Macao. The service will significantly improve Macao tourists’ payment experiences and open up new digital business and marketing opportunities by utilizing innovative payment interaction technology.
Ken Griffin’s Citadel Investment Group was the largest stakeholder in the company from among the funds in Insider Monkey’s database at the end of Q3 2024. It owns 14.92 million shares worth $1.58 billion as of Q3.
Conventum – Alluvium Global Fund stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its Q3 2024 investor letter:
“On 24 September the People’s Bank of China unveiled a massive three part stimulus package involving: (1) slashing the amount of cash banks need to hold in reserve and lowering the main policy interest rate; (2) cutting mortgage rates on existing home loans by 0.5% and reducing down payment requirements for second homes from 25% to 15%; and (3) supporting equity markets by a USD 114b lending pool to encourage companies to buy back shares and non-bank financial institutions to buy local equities (which may be expanded by the same amount two more times)5 . We are flabbergasted. But we shouldn’t be. After all, these types of arrangements have been all too common over the last 15 years. The local equity markets responded with gusto, and for the last week of the quarter the CSI 300 Index (Shanghai and Shenzen listed companies) was up 25.1%. Alibaba Group Holding Limited (NYSE:BABA) was not lost in all this, and returned 26.8% over that one week period. But Alibaba had already performed well so during the whole September quarter it was up a staggering 56.0%. As a result, Alibaba is no longer the cheap stock it once was. It now trades at a premium to our valuation – a valuation which admittedly had been progressively reduced over our holding period as a result of deteriorating business fundamentals. As a result of Alibaba’s significant outperformance, by the end of the quarter it had reached 3.7% of the Fund. We are weighing up our options here, considering the relative risk.”
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Over the years, its strong Services business segment has grown to include Apple Wallet and Apple Pay, which allow consumers to manage payments from their iPhones.
By concentrating on a high-end, intricately linked ecosystem of goods, services, and software, Apple Inc. (NASDAQ:AAPL) has strengthened its long-term dominance in the consumer electronics sector. This ecosystem revolves around Apple’s flagship iPhone, which generates 46% of the company’s net sales. Giving it pricing power, switching costs, and network effects as a result. Retaining consumers inside this walled garden maximizes the benefits of all other Apple services and products. This approach gives the company room to flourish and sets it apart.
For the September quarter in Q4 of 2024, Apple Inc. (NASDAQ:AAPL) reported record revenue of $94.9 billion, up 6% year over year. This was driven by strong iPhone revenue of $46.2 billion, which climbed 6% and set a record for the September quarter across all geographic areas. Over 1 billion paid memberships throughout the firm’s ecosystem contributed to a double-digit increase in services revenue, which hit a record high of $25 billion, up 12% year over year. The Apple Intelligence system, iPhone 16, Mac with M4 chips, new iPads, and improvements for the Apple Watch and AirPods were among the advances the company introduced. Furthermore, Apple broke revenue records in emerging markets, with the September quarter seeing an all-time high in India.
In terms of the environment, Apple Inc. (NASDAQ:AAPL) made progress toward its goal of becoming carbon-neutral throughout its whole footprint by 2030 by launching the first-ever carbon-neutral Mac and a carbon-neutral Apple Watch option. These accomplishments highlight the company’s robust innovation, growth, and sustainability leadership.
CDT Capital Management stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q4 2024 investor letter:
“The crowd. While this evolution in AI is going to change the world, market expectations for the technology have become unhinged. The crowd, which is more like an exuberant mob, anointed the Mag 7 with spectacular, nonsensical valuations based on the premise that AI will be an amazing, money-printing growth engine for these companies – and the truth is it likely will be. The problem is that the math just isn’t mathing.
Let me explain what I mean by picking on the world’s most valuable stock, Apple Inc. (NASDAQ:AAPL). For background, Apple does not have a robust homegrown AI platform, nor does it have a plan to meaningfully monetize AI from Apple users. Right now, from our perspective, Apple’s, Apple Intelligence strategy of implementing third-party AI tools to stay competitive will likely be more of a cost of doing business than an avenue for sales and yet in 2024, the stock soared +33% based on the AI dream as exemplified by the quote below.
“A golden era of growth for Cupertino is now on the horizon into 2025.”..” (Click here to read the full text)
1. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 202
The Best Cash App Stock, Alphabet Inc. (NASDAQ:GOOGL) has transformed itself into a true technology giant, producing tens of billions of dollars in free cash flow every year with solutions spanning from advertising to cloud computing and self-driving automobiles. Even though Alphabet’s primary search business has been the subject of antitrust concerns, the company’s overall strength is that it continues to lead in several areas, including search, artificial intelligence, video, and cloud computing. To enable users to make payments, it provides the Google Wallet app for Android.
In Q3 of 2024, a 35% increase in Google Cloud revenue is the primary driver of Alphabet Inc. (NASDAQ:GOOGL)’s record revenue growth, with consolidated revenue up 15% year over year. Significant advancements have been made in AI and cloud computing; for example, Google Cloud generated $1.9 billion in operating income with a 17% operating margin, while Gemini models had an over 14x increase in API calls over a six-month period. Over the last four quarters, YouTube has surpassed $50 billion in total ad and subscription revenue, with ad revenues rising 12% year over year. In just 18 months, Alphabet has lowered machine costs per query by more than 90% due to its developments in AI infrastructure, which include data center investments and specialized GPUs. The company’s autonomous car business, Waymo, has strengthened its position as the industry leader by reaching one million miles driven entirely on its own each week and growing its collaboration with Uber. These accomplishments demonstrate Alphabet’s ongoing expansion and innovation in its major businesses.
Google and the Saudi Central Bank (SAMA) have recently teamed up to establish Google Pay in Saudi Arabia through the “mada,” the country’s payment system. The service is expected to go live in 2025.
Analyst Brian Pitz of BMO Capital increased his price objective for Alphabet Inc. (NASDAQ:GOOGL) from $217 to $230 and maintained his Outperform rating for the company’s stock. As a result of positive channel inspections, the company is also seeing an increase in Search, GCP, and YouTube income. In a research note, BMO informs investors that although Gemini unlocks TAM potential due to its capacity to handle complicated inquiries, PMax is boosting ROAS for Search. Gemini/Vertex AI’s middle-layer advancements are helping GCP. It adds that YouTube’s lower-funnel QR codes are popular with advertisers.
Oakmark Equity and Income Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q4 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOGL) was the top contributor during the quarter. Despite ongoing litigation with the Department of Justice in its antitrust case, the U.S.-headquartered interactive media and services company’s stock price rose after posting solid third-quarter earnings. In the Search division, the company generated low-teens year-over-year revenue growth and management highlighted that they’re seeing strong user engagement with their new AI Overviews feature. The biggest upside surprise came from the Cloud division, where revenue growth accelerated to 35% and margins reached a record of 17%. This performance was driven by client demand for AI Infrastructure and Generative AI Solutions as well as core Google Cloud Platform (GCP) products. We continue to believe Alphabet is a collection of great businesses that can unlock further value over the long term through its world-class AI capabilities.”
Overall, Alphabet Inc. (NASDAQ:GOOGL) ranks first on our list of the 10 Best Cash App Stocks To Buy According to Hedge Funds. While we acknowledge the potential for GOOGL to grow, our conviction lies in the belief that some 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 GOOGL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and 30 Most Important AI Stocks According to BlackRock
Disclosure: None. 10 Best Cash App Stocks To Buy According to Hedge Funds is originally published on Insider Monkey. 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.
