This article will talk about the 10 best Fortune 500 stocks to buy now.
Should Investors Be Overly Cautious?
The aggregate revenue of the Fortune 500 companies in 2023 reached a record $41 trillion, up 0.1% year-over-year. Profits also rose 2% after declining earlier in 2022. The US took the lead from Greater China with the most companies on the Fortune 500 list for the first time since 2018. It has 139 companies as of August this year, an increase of 3 from 2023, while Greater China has 133 companies, down 9 from last year.
The financial sector, including banks and insurance companies, led all industries with the most Fortune 500 companies. Collectively tech giants brought in $282 billion in net income, up from $233 billion the previous year. Currently, 13 companies are making their Fortune 500 debut, reflecting the world’s fascination with AI and weight-loss drugs.
While the S&P 500 has recovered most of its losses, the rebound is being led by sectors like real estate, utilities, and consumer staples rather than major tech companies. Investors are shifting focus due to concerns over economic growth and expectations of Fed rate cuts.
Still, it seems like investors think that while investment portfolios should be diversified given the current economic conditions, this sentiment does not imply divesting from tech stocks, which of course contribute greatly to the aggregate Fortune 500 revenue. Jason Draho, UBS Global Wealth Management head of Americas Asset Allocation, emphasized this sentiment and we covered this earlier in our article about the 10 Best Tech Stocks To Buy Right Now Under $10:
“…investors should view potential dips in tech stocks as good long-term buying opportunities, as 10% corrections are historically good entry points in tech… He thinks that this market volatility is acyclical. The recent sell-off in the tech sector was not primarily due to economic concerns but rather to sector-specific issues. Despite this, tech giants will continue to benefit from the AI CapEx investment story. While there may be short-term challenges, the long-term outlook for these companies remains positive… Draho also cautioned against over-concentrating portfolios in the sector. He suggested diversifying exposure by investing in sector leaders as well as companies likely to benefit from tech disruption as a way to manage potential downside risks in tech stocks.”
Just last week, Dan Greenhaus, Solus Alternative Asset Management’s chief strategist discussed markets, and the rebound’s staying power, all while suggesting that predicting the Fed’s next move had become more difficult.
He discussed the ongoing recession concerns, particularly after negative comments from financial representatives. Despite these worries, he believes the US consumer is performing well, the economy is stable, and corporate profits are exceeding expectations. This context suggests that the recent sell-off in certain AI stocks was followed by a justified rebound, as issues appear limited to recent trends.
The S&P 500 is currently facing resistance around the 5,600 level, a key point of concern for investors. Dan Greenhaus noted that the recent inversion of the yield curve raised anxiety but the 2-10-year curve is slightly positive. Despite these worries, credit spreads for investment-grade bonds remain stable, and overall cross-asset indicators suggest a stable market environment.
Recently, discussions around potential interest rate changes have gained momentum, particularly following insights from Goldman Sachs CEO David Solomon. He indicated a likely 25 basis point cut by the Federal Reserve, although he also acknowledged the possibility of a 50 basis point reduction. Greenhaus believes the Fed will opt for a 25 basis point cut, marking the start of a series of reductions. This perspective is supported by the normalization of inflation and a slowing economy.
According to Greenhaus, the cyclical components of the stock market appear to be performing well, indicating that the overall economic fundamentals remain robust, and there is no concrete case for any specific rate cut scenario. As Fortune 500 companies continue to generate record revenues and profits as well, investor sentiments should not be shifting drastically. With that being said, we’re here with a list of 10 best Fortune 500 stocks to buy now.
Methodology
We first looked at the list of Fortune 500 companies, as of 2024. We then selected 10 stocks from these Fortune 500 companies that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 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).
10 Best Fortune 500 Stocks To Buy Now
10. CVS Health Corp. (NYSE:CVS)
Market Capitalization as of September 14: $72.86 billion
Number of Hedge Fund Holders: 60
CVS Health Corp. (NYSE:CVS) is a healthcare company that owns CVS Pharmacy, a retail pharmacy chain; CVS Caremark, a pharmacy benefits manager; and Aetna, a health insurance provider, among many other brands. It is the world’s second-largest healthcare company that operates many businesses, including retail pharmacies, health insurance plans, and specialty pharmacy services.
In its Q2 2024 results, the company revised its earnings forecast for the full year downward due to challenges in its Health Care Benefits segment, which includes its insurance division, Aetna. This marks the second time it has adjusted its 2024 forecast, having previously lowered guidance after its Q1 results for the same reasons.
However, the company still reported a 2.60% year-over-year revenue improvement in FQ2 2024. The revenue was $91.23 billion, while the earnings per share were $1.83. Investors are still expecting returns as we see that 60 hedge funds are long it. The highest stake is at $764,023,075 by Pzena Investment Management.
The company serves over 186 million people. The company also grew Aetna medical members using CVS pharmacies to 9 million, an 8% increase, and 13.8 million Aetna members are now covered by Caremark, a 13% rise.
CVS Health Corp. (NYSE:CVS) is positioned for long-term success, driven by its innovative strategies and integrated healthcare model. The company is accelerating growth by implementing transparent pharmacy reimbursement models like CVS CostVantage, increasing biosimilar adoption, and enhancing patient outcomes through its connected healthcare delivery assets.
Ariel Global Fund stated the following regarding CVS Health Corporation (NYSE:CVS) in its Q2 2024 investor letter:
“American healthcare company, CVS Health Corporation (NYSE:CVS), also declined following disappointing earnings results and a subsequent reduction in full year guidance. The miss was primarily due to increased utilization of Medicare Advantage plans and weakness in the health services segment driven by the loss of a large client and continued pharmacy client price improvements. In response, management reiterated its focus on improving margins and enhancing its positioning in Medicare Advantage. CVS believes the program can remain an attractive business for Aetna and CVS Health over time and will construct its bid for 2025 as a multi-year repricing opportunity across plan level benefits. Meanwhile, CVS continues to return capital to shareholders through dividends and a recent accelerated share repurchase transaction.”
9. Booking Holdings Inc. (NASDAQ:BKNG)
Market Capitalization as of September 14: $131.63 billion
Number of Hedge Fund Holders: 96
Booking Holdings Inc. (NASDAQ:BKNG) is a leading online travel agency that connects travelers with a range of accommodation options, transportation services, activities, and other travel-related services. Through brands like Booking.com, Kayak, and OpenTable, it makes it easy for travelers to plan and book their trips online, spanning over 220 countries.
In Q2 2024, travelers booked 287 million room nights across the company’s platforms, increasing 7.27% year-over-year improvement in revenue, while repeat travelers are growing quickly. Alternative accommodation listings rose 11% from last year, boosting bookings. The Genius program boosts direct bookings, with nearly 30% of travelers in higher tiers. Merchant bookings grew to 58% of total bookings, while flight bookings increased 28% year-over-year.
Total revenues of $5.86 billion were generated in Q2, a 7.27%% increase year-over-year. For the full year, management expects gross bookings growth to exceed 6%, below previous forecasts due to lower flight prices, but revenue growth is projected over 7%, higher than before.
Innovations such as GenAI-assisted trip planners and enhanced mobile applications have streamlined the booking process and enriched user experiences. The company is well-positioned for growth as more and more tourists want to plan trips online. It is held by 96 hedge funds. The biggest stake is valued at $1,605,652,190 by Fisher Asset Management.
Wedgewood Partners stated the following regarding Booking Holdings Inc. (NASDAQ:BKNG) in its Q2 2024 investor letter:
“Booking Holdings Inc. (NASDAQ:BKNG) contributed to performance as travel spending across the U.S. and Europe remains quite healthy, whereas the Company took share in alternative accommodations, and looks set to expand margins after a few years of reinvestment. The Company has also been aggressively reducing its share count at reasonably attractive valuation multiples. Booking should be able to compound earnings at an attractive, double-digit rate for the next few years given these various initiatives.”
8. ServiceNow Inc. (NYSE:NOW)
Market Capitalization as of September 14: $180.94 billion
Number of Hedge Fund Holders: 97
ServiceNow Inc. (NYSE:NOW) is a cloud-based software company that provides a platform for digital workflows. This platform helps organizations automate and streamline their IT operations, customer service, human resources, and other business processes to improve efficiency, reduce costs, and enhance customer experience.
Its significance as an AI platform for business transformation is rapidly growing, with NowAssist emerging as the fastest-growing product in the company’s history, achieving a quarter-over-quarter doubling of net new annual contract value. In Q2, the company secured 11 deals exceeding $1 million, including two that surpassed $5 million, across various sectors such as banking, healthcare, and technology.
Key clients like Stellantis, American Honda, Merck, and Adobe are using NowAssist to optimize their operations and boost productivity. Its GenAI strategy emphasizes the integration of intelligence into workflows, utilizing domain-specific multimodal language models that are faster, more accurate, and cost-effective. The implementation of NowAssist has resulted in significant time savings, including 45 minutes saved per avoided IT help desk case and a total of 21,000 hours saved through enhanced self-service.
The company impressed the market with strong second-quarter results that highlighted the company’s AI potential. The total revenue generated was up 22.19% year-over-year, recording $2.63 billion. Revenue generated from new Pro Plus edition contracts, which feature GenAI capabilities, doubled from the previous quarter. Subscription revenue increased by 23% year-over-year.
97 hedge funds are long NOW, with the highest stake at $1,263,501,660 by Fisher Asset Management. The company is capitalizing on the rising demand for AI-driven solutions. An instance this quarter, the revenue generated from new Pro Plus edition contracts, which feature GenAI capabilities, doubled from the previous quarter. ServiceNow Inc. (NYSE:NOW) is set to maintain its leadership in the enterprise software market, making it a top Fortune 500 stock.
Lakehouse Global Growth Fund stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its April 2024 investor letter:
“US-based software company, ServiceNow, Inc. (NYSE:NOW), provided another strong result, continuing its long and consistent track record of 20%-plus revenue growth combined with healthy profitability. Subscription revenues grew 25% year-on-year to $2.5 billion and free cash flow grew 47% year-on-year to $1.2 billion. The company’s core operating metrics were also impressive with remaining performance obligations growing 26% year-on-year to $17.7 billion (i.e. roughly 2x 2023 revenue) and renewal rates holding steady at 98%. Performance was evenly spread across segments, products, and geographies, with notable strength in the US federal government. The company now boasts 1,933 customers generating in excess of $1 million in Annual Contract Value (ACV), which is pleasing to see as it implies multiple solutions are involved and that the company’s platform model is increasingly resonating with customers. In our view, ServiceNow is one the highest quality software businesses globally as the combination of consistent growth at scale, robust free cash flow generation and a large addressable market make it a compelling opportunity.”
7. JPMorgan Chase & Co. (NYSE:JPM)
Market Capitalization as of September 14: $582.50 billion
Number of Hedge Fund Holders: 111
JPMorgan Chase & Co. (NYSE:JPM) is a multinational finance company and one of the world’s largest banks by market capitalization, offering a wide range of financial services to individuals, businesses, and institutions that include commercial banking, investment banking, asset management, wealth management, and consumer banking.
As of March 31, it had $4.1 trillion in assets and $3.6 trillion in assets under management, solidifying its status as the largest bank in the US. In just Q1 this year, the company generated $655 million in total credit and capital for consumers, small businesses, government entities, and nonprofit organizations.
JPMorgan Chase & Co. (NYSE:JPM) is automating internal tasks and enhancing customer experiences. In August, it launched a GenAI assistant to help ~60,000 employees complete tedious tasks more efficiently. For customers, it introduced in-store pay-by-face biometric payment solutions for merchants in the US. Earlier in May, the company also launched a new data-managed service for institutional investors to streamline their operating models and access consistent data.
As of June 30, the company was held by 111 hedge funds, of which the largest stake is valued at $2,576,879,756 by Fisher Asset Management.
The company’s future is looking at sustained success due to its cost advantages and strategic investments in organic growth. With robust financial performance and its size and scale, JPM is set to benefit.
Carillon Eagle Growth & Income Fund stated the following regarding JPMorgan Chase & Co. (NYSE:JPM) in its first quarter 2024 investor letter:
“JPMorgan Chase & Co. (NYSE:JPM) contributed positively to performance following solid financial results and positive guidance for the remainder of 2024. Moreover, growing chatter around rising capital markets activity likely contributed to the stock’s strong performance relative to other banks. Recall that JPMorgan has a robust capital markets franchise.”
6. UnitedHealth Group Inc. (NYSE:UNH)
Market Capitalization as of September 14: $549.46 billion
Number of Hedge Fund Holders: 114
UnitedHealth Group Inc. (NYSE:UNH) is a multinational health insurance and services company that provides health insurance plans, healthcare services, and technology solutions. It’s one of the largest health insurers in the US, offering individual, employer-sponsored, and government-sponsored health plans.
It provides health coverage to over 50 million people in the US. The company prioritizes community service, with its professionals making over 2 million home visits in the past year to identify unrecognized health emergencies in patients.
Revenue in Q2 2024 was $98.86 billion, up 6.41% year-over-year, driven by its Optum and UnitedHealthcare business segments. The total US customer base grew by 2.3 million to reach 29.6 million individuals. Optum, the global healthcare services division that uses data to enhance care quality, lower costs, and optimize performance, reported revenues of $62.9 billion, representing a $6 billion increase year-over-year. The earnings per share were $6.80.
The company leverages its size to gain an early mover advantage in new drug markets, such as GLP-1 weight loss treatments, benefiting from low costs and a vast network of healthcare providers. This advantage can extend to other innovative therapies, including gene editing for hereditary diseases and advanced cancer treatments.
114 hedge funds are long UNH, with the biggest stake at $1,573,649,573 by Fisher Asset Management. UnitedHealth Group Inc. (NYSE:UNH) has demonstrated strong performance even in challenging economic conditions and is well positioned to capitalize on the growing demand for health insurance, coming from the expected increase in population in the upcoming years.
Invesco Growth and Income Fund stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its Q2 2024 investor letter:
“UnitedHealth Group Incorporated (NYSE:UNH): Like many managed care providers, United Health has come under pressure from rising medical costs and higher-than-expected utilization. The stock is currently undervalued based on our analysis. We view the company as a high-quality compounder with secular growth opportunities in the managed care segment. The US Presidential election may cause additional near-term uncertainty, but we believe United Health will be able to rebound once pricing and utilization issues normalize.”
5. Berkshire Hathaway Inc. (NYSE:BRK-B)
Market Capitalization as of September 14: $965.85 billion
Number of Hedge Fund Holders: 120
Berkshire Hathaway Inc. (NYSE:BRK-B) is a multinational conglomerate holding company, known for its diverse investments in insurance, manufacturing, retail, and utilities.
It’s the world’s most profitable insurance company. Its portfolio includes major brands like Geico, Duracell, and Dairy Queen. The company’s core insurance operations generate substantial investable cash, which Warren Buffett utilizes for delivering impressive returns.
Recently, Berkshire Hathaway Inc. (NYSE:BRK-B) entered the LNG market by acquiring Dominion Energy’s share of the Cove Point LNG export plant in Maryland in 2023. With the LNG market expected to boom over the next 5 years (projected to grow 5x from 2024 to 2028), Berkshire Hathaway Inc.’s (NYSE:BRK-A) stock is certainly one to watch.
In Q2 2024, revenue was $93.65 billion, improving 1.24% year-over-year. The earnings per share was $5.38. With a track record of strategic acquisitions, this stock is an attractive choice for investors seeking stability and long-term growth.
4. Apple Inc. (NASDAQ:AAPL)
Market Capitalization as of September 14: $3383.75 billion
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) is one of the world’s largest technology companies by revenue, known for its consumer electronics, software, and services.
The revenue in FQ3 2024 was up 4.87% year-over-year and reached $85.78 billion. The services division set a record at $24.2 billion, growing 14% year-over-year. iPhone revenue reached $39.3 billion, despite a slight decline. Moreover, Mac revenue grew 2% to $7 billion, and iPad revenue surged 24% year-over-year.
The company also launched Apple Intelligence, a personal intelligence system backed by AI. Apple Inc.’s (NASDAQ:AAPL) iPhone event in September unfolded as anticipated, with attention shifting to pre-order data and sales figures for the new iPhone. A survey by US AlphaWise indicated that about 60% of customers planning to upgrade are doing so because of Apple Intelligence. Even more advanced AI features will further roll out in 2025.
On August 29, The Wall Street Journal reported that Apple Inc. (NASDAQ:AAPL) is considering a significant investment in OpenAI, alongside NVIDIA, as part of a funding round led by Thrive Capital that would value OpenAI at $100 billion.
Currently, 184 hedge funds are long AAPL. Berkshire Hathaway has the highest stake in the company, with a position of $84,248,000,000.
Baron Technology Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q2 2024 investor letter:
“The Fund’s chief relative detractor was Apple Inc. (NASDAQ:AAPL), even though it was a meaningful contributor to absolute performance, as we added to our Apple position significantly during the period. We bought Apple well, but in 20/20 hindsight we didn’t buy enough. Because Apple has an oversized weight in the Benchmark (its average weight was 15.7% for the period), when Apple’s stock outperforms (it appreciated 23.0%), it has generally been a headwind to relative performance. Our Apple underweight accounted for 33% of our relative underperformance for the period.
This quarter we increased the size of our position in Apple Inc., a leading technology company known for its innovative consumer electronics products like the iPhone, MacBook, iPad, and Apple Watch. Apple is a leader across its categories and geographies, with a growing installed base that now exceeds 2 billion devices globally. The company’s attached services – including the App Store, iCloud, Apple TV+, Apple Music, and Apple Pay – provide a higher margin, recurring revenue stream that both enhances the value proposition for its hardware products and improves the financial profile. Apple now has well over 1 billion subscribers paying for these services, more than double the number it had just 4 years ago. The increasing services mix has led to healthy operating margin improvement, providing more free cash flow for Apple to reinvest in the business and to distribute to shareholders. Throughout its 48-year history, Apple has successfully navigated and capitalized on major technological shifts, from PCs to mobile to cloud computing. We believe the company’s leading brand and device ecosystem position it to do equally well in the AI age, and this was the driver of our decision to re-invest. “Apple Intelligence” – the AI strategy unveiled at Apple’s recent Worldwide Developer Conference – leverages on-device AI and integrations with tools like ChatGPT to enhance user experiences across its ecosystem. The AI suite enables users to create new images, summarize and generate text, and use Siri to perform actions across their mobile applications, all while maintaining user privacy and security. We think Apple Intelligence can drive accelerated product upgrade cycles and higher demand for Apple services. The combination of growth re-acceleration, increasing services contribution, and thoughtful capital allocation should continue driving long-term shareholder value.”
3. Alphabet Inc. (NASDAQ:GOOGL)
Market Capitalization as of September 14: $1941.84 billion
Number of Hedge Fund Holders: 216
Alphabet Inc. (NASDAQ:GOOGL), the parent company of Google, is one of the world’s largest technology companies. It encompasses a wide range of businesses, including Google Search, Google Maps, YouTube, Google Cloud, and Waymo, and is known for its innovative products and services, and its focus on AI and other cutting-edge technologies.
The company also has a direct presence in the autonomous driving industry through its Waymo business division. More than 700 Waymo cars are present in San Francisco alone, and they have also come under criticism for fires, crashes, and traffic violations. It also offers robotaxi services, and Waymo shared in August that it offers 100,000 robotaxi rides in San Francisco, Los Angeles, and Phoenix, Arizona.
Alphabet Inc. (NASDAQ:GOOGL) is projected to achieve a $100 billion revenue run rate from YouTube Ads and Google Cloud by the end of 2024. In Q2, Cloud revenue alone increased by 28.8%. Overall revenue grew by 13.59%, totaling $84.74 billion. Google currently holds approximately 91.06% of the search engine market.
Google plans to spend $50 billion on AI initiatives by the end of 2024. Alphabet Inc. (NASDAQ:GOOGL) leverages strong competitive advantages through its algorithms, AI expertise, and valuable data access. Its capabilities suggest a positive outlook for the future. 216 hedge funds are long GOOGL, with the highest stake at $8,856,226,893 by Fisher Asset Management.
Patient Capital Management stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q2 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOGL) was a top contributor in the second quarter, finally catching up to its peers in the Magnificent 7. The company gained 20.8% in the period following strong first quarter earnings, a new $70B repurchase program (3% of shares outstanding) and the initiation of a cash dividend ($0.20 per share; 0.42% yield). We continue to believe the market underappreciates Google’s exposure to AI with its Gemini model being integrated into search results, YouTube advertising and its cloud offering. We continue to think that the cloud players will be the AI winners in the long-term, with Google being well positioned to take advantage. While the company trades at 24x 2024 earnings, if you remove the money-losing and under-earning businesses, you realize that you are paying below a market multiple for the core Google business. We do not believe there are many other AI winners trading at such an attractive multiple.”
2. Microsoft Corp. (NASDAQ:MSFT)
Market Capitalization as of September 14: $3201.93 billion
Number of Hedge Fund Holders: 279
Microsoft Corp. (NASDAQ:MSFT) develops and markets software, services, and hardware, with businesses worldwide and offices in over 100 countries. It is best known for its Windows operating system, Office productivity suite, and Xbox video game console, and is one of the world’s largest software makers by revenue.
In FQ4 2024, the company made $64.73 billion in revenue, recording a year-over-year increase of 15.20%. The earnings per share stood at $2.95. Both of these values exceeded Street estimates. During the same quarter, Microsoft Cloud, its most popular service, logged $36.8 billion in quarterly revenue, up by 21% year-over-year, and had record bookings.
It reported Office commercial sales of $48 billion. Individual Office sales also rose to $6.2 billion, reflecting a 4% growth. Dynamics ERP and CRM software sales reached $6.3 billion, a 19% increase. Bing sales grew by 3% year-over-year as more users switched from Google Search.
Microsoft Corp. (NASDAQ:MSFT) is a leader in AI technology, with its Azure OpenAI service seeing a 60% increase in customers, reaching 60,000 clients in the second quarter of this year. The company has formed strategic partnerships with Lumen Technologies and Palantir to enhance its position in the AI space and manage workloads on its cloud service. With such partnerships, investors can expect growing returns, making it a top Fortune 500 stock.
279 hedge funds hold long positions in the company. The highest shareholder is Bill & Melinda Gates Foundation Trust, with a stake worth $15,593,905,379.
1. Amazon.com Inc. (NASDAQ:AMZN)
Market Capitalization as of September 14: $1961.21 billion
Number of Hedge Fund Holders: 308
Amazon.com Inc. (NASDAQ:AMZN) is engaged in e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence, and is considered one of the Big Five American technology companies. It started by selling books online but now offers a massive selection of products across various categories. Beyond e-commerce, it owns AWS, a dominant cloud computing platform, and has a significant presence in digital streaming with Prime Video.
As of Q2 2024, Amazon.com, Inc. (NASDAQ:AMZN) is held by 308 hedge funds. From these, the highest stake is valued at $8,460,561,806 by Fisher Asset Management.
The company remains a leader in online retail and cloud computing. AWS is its most profitable segment, boasting over 30% margins, though it faces increasing competition from Microsoft Azure and Google Cloud. AWS is projected to grow annually by 15% to 21% through 2028, making its performance a crucial factor in the company’s future profits. AWS increased its revenue by 18.8% year-over-year in Q2 2024.
Amazon Prime has also evolved into a major success led by 200 million global members and enhancing customer loyalty. The subscription service drives higher spending among members and is approaching an annual run rate of $100 billion, alongside significant growth in Advertising Services. However, physical stores, including Whole Foods Market, remain the smallest and slowest-growing revenue stream for the company.
Hayden Capital stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Our portfolio is still recovering from the 2022 downturn, although we’ve made meaningful progress in the last two years. While that experience has taught us many lessons, that dislocation also provided a rich vein of opportunities that we continue to mine today.
Some of our biggest winners in the last two years, have been “re-acceleration” stories. These are cases where once rapidly growing companies suddenly put the brakes on during a weak economy. There could be several reasons for this – customers pulling back during a recession, the company proactively curtailing growth spend as a precaution, needing to cut costs & right-size the business to become profitable quickly, or many other reasons.
But the commonality seems to be that as soon as growth stops, the market narrative turns suddenly from positive, to “this company is finished”. They go from being valued for many years of rapid growth, to being priced like a mature company that will never realize significant growth again. But often neither scenario is true, with the ultimate future path somewhere in between.
I find the fact this type of opportunity even exists, fascinating. Especially since it seems to happen every bear-market – perhaps indicating it’s embedded in human nature (and thus persistent & likely minable throughout one’s investing career). For example, I gave the examples of Amazon.com, Inc.’s (NASDAQ:AMZN) stock performance in our Q1 2022 letter (please re-read this piece for more context; LINK)…” (Click here to read the full text)
While we acknowledge the growth potential of Amazon.com Inc. (NASDAQ:AMZN), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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