In this article, we will take a look at the 10 Best High Growth Stocks To Buy.
At Wall Street, long-standing investment strategies are being reshuffled as the monetary and political landscape evolves. Reallocation is the name of the game in a week where the S&P 500 and Nasdaq experienced declines of 1.97% and 3.65%, respectively, marking their largest weekly losses since April. Conversely, the Dow advanced 0.72%, and the small cap-focused Russell 2000 climbed 1.68%. A few tech mega-caps—led by Apple Inc., NVIDIA Corporation, Meta Platforms, Inc., and Amazon.com, Inc.—have dominated stock market returns, especially over the last 18 months, a trend that is evident in the diverging performances of the largest 50 stocks in the S&P 500, weighted by market capitalization. This trend, however, seems to have reversed sharply recently, with mega-caps selling off while the average stock holds close to record levels.
Investors are grappling with this sudden shift, and one possible explanation is that mega-caps may have become too expensive. “The stock market is experiencing a long overdue rotation,” said Glen Smith, chief investment officer at GDS Wealth Management. “Investors are pulling money out of high-performing big tech stocks and reallocating it to other market areas.” Notably, tech giants like NVIDIA Corporation, previously popular among options traders, saw a notable shift in sentiment, with demand for bearish puts surpassing calls at the highest rate in five months. “It signals a different regime,” said Erika Maschmeyer, a portfolio manager at Columbia Threadneedle Investments. “The market could be choppier and more volatile, with more dispersion than we have seen.”
This divergence has reassured some Wall Street experts who had been concerned about the rally’s dependence on a few massive tech stocks. Additionally, rising optimism about forthcoming interest rate decreases from the Fed has bolstered smaller and more cyclically oriented names. In that regard, the Fed’s battle against inflation might be nearing its end after U.S. consumer prices unexpectedly fell in June. Chicago Fed President Austan Goolsbee considers the latest inflation data “excellent” and describes persistent housing inflation improvement as “profoundly encouraging.” However, Scott Rubner of Goldman Sachs is skeptical about buying the dip. The tactical strategist believes the S&P 500 has little room for upward movement from its current position. He points out that historically, July 17 has marked a turning point for the equity benchmark, with data dating back to 1928 supporting this claim. Rubner notes that August typically sees the worst outflows from passive equity and mutual funds.
On another note, the U.S. economy added slightly more jobs than expected in June. Nonfarm payrolls increased by 206,000 for the month, surpassing the Dow Jones forecast of 200,000 but falling short of the revised May gain of 218,000, which was significantly reduced from the initial estimate of 272,000. However, the unemployment rate unexpectedly rose to 4.1%, matching the highest level since October 2021 and presenting a mixed signal for Federal Reserve officials considering their next monetary policy move. The jobless rate was forecasted to remain steady at 4%. Although June job creation exceeded expectations, much of this growth was driven by a 70,000 surge in government jobs. Additionally, the health care sector, a consistent leader, added 49,000 jobs, while social assistance contributed 34,000 and construction increased by 27,000.
The 2024 presidential election is heating up, with President Joe Biden opting not to run for re-election and Republican nominee and former President Donald Trump continuing his campaign after surviving an assassination attempt. Historically, presidential election years have often brought strong returns for stock investors, influencing short-term economic policy. However, recent events suggest that this election year may be far from typical.
Our Methodology
To compile our list of the best high growth stocks to buy, we identified companies with strong sales growth over the past five years. These companies were then ranked based on the number of hedge fund investors in the first quarter of 2024, out of a total of 919 hedge funds. 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 High Growth Stocks To Buy
10. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 45
Annual Sales Growth Over the Past 5 Years: 30.67%
Palantir Technologies Inc. (NYSE:PLTR) is a leading developer of data mining and AI software that helps businesses and governments analyze large datasets to drive data-backed decisions. Its product lineup includes Palantir Gotham, Palantir Apollo, and Palantir Foundry. With the launch of its Artificial Intelligence Platform (AIP), Palantir Technologies Inc. (NYSE:PLTR) has become one of Wall Street’s favorite stocks, with shares surging 65% since the beginning of the year.
Palantir Technologies Inc. (NYSE:PLTR) started off as a provider of security software for the US government and its major customers included the United States Intelligence Community (USIC) and United States Department of Defense. It won the CIA as its first customer back in 2005 and later won contracts from the FBI, NSA, and NYPD. Back then, there was just Palantir Gotham which was being used by law enforcement and intelligence agencies to combine structured data such as spreadsheets with unstructured data like images to draw connections
In 2016, the Colorado-based software company launched “Foundry”, which was specifically designed for commercial customers to help them analyze large amounts of data to drive business decisions such as optimizing their supply chains using real-time data and analytics. In 2020, Palantir Technologies Inc. (NYSE:PLTR) launched the Apollo platform, its continuous delivery system that schedules automated updates for the Gotham and Foundry platforms, with little human intervention, and makes their maintenance less costly.
For the first quarter of the fiscal year 2024, Palantir Technologies Inc. (NYSE:PLTR) reported robust results with a notable rise in revenue and customer acquisition, especially within the US commercial sector. The company’s revenue reached $634 million, reflecting a 21% year-over-year increase, fueled by the success of its Artificial Intelligence Platform (AIP) and a strong US commercial business. Palantir added 41 new customers in the US commercial sector and recorded $81 million in GAAP operating income, a company record. Despite challenges in Europe, Palantir remains optimistic, citing the increasing demand for AIP and its essential global market contributions.
Palantir Technologies Inc. (NYSE:PLTR) core business is also picking up pace and the company became the first software company to win a contract with the U.S. army. Its US government business revenue grew 8% quarter on quarter, up from 3% quarter on quarter in Q4 2023.
On June 18, analysts at Argus initiated coverage on Palantir Technologies Inc. (NYSE:PLTR) with a Buy rating and a price target of $29 per share. The investment firm highlighted the company’s substantial improvements in profitability and cash flow over the past year. Argus noted that Palantir Technologies Inc. (NYSE:PLTR)’s government business accounted for 55% of its revenue in 2023, but they anticipate the commercial segment, particularly in the U.S., to drive future growth.
A review of 919 hedge fund portfolios by Insider Monkey for the March quarter of 2024 revealed that 45 held stakes in Palantir Technologies Inc. (NYSE:PLTR). The leading investor was D. E. Shaw, with 13.48 million shares valued at $310.23 million.
Palantir Technologies Inc. (NYSE:PLTR) is one of the largest pure-play data analytics companies that has a diverse client base comprising both government and commercial customers. It has the potential to gain further share using its technological prowess as artificial intelligence penetrates military applications and as it simultaneously wins commercial customers in the US.
9. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 65
Annual Sales Growth Over the Past 5 Years: 47.52%
Shopify Inc. (NYSE:SHOP) is a leading provider of internet infrastructure for commerce, equipping businesses with the tools needed to launch, expand, and manage their retail operations across various scales. Shopify’s platform and services are utilized by millions of businesses in 175 countries, playing a crucial role in supporting a diverse range of enterprises.
Starting 2024 on a strong note, Shopify Inc. (NYSE:SHOP) reported a first-quarter revenue increase of over 25%, excluding logistics. The company’s dedication to merchant success is evident in the rollout of over 400 new features and updates over the past two years, enhancing engagement and product adoption. During the earnings call, Shopify Inc. (NYSE:SHOP) announced a Gross Merchandise Volume (GMV) of $60.9 billion, a 23% year-over-year increase, and revenue of $1.9 billion, also up 23% YoY, excluding logistics businesses.
The stock has received a surge of positive ratings from analysts recently. Evercore ISI upgraded Shopify Inc. (NYSE:SHOP) from In Line to Outperform on June 14, setting a new price target of $75.00. This upgrade follows a significant drop in Shopify’s stock price, which had fallen approximately 30% from its 52-week high. Evercore ISI highlighted Shopify’s financial prospects, projecting that its FCF margins, currently at 12%, could rise to high-teen levels by 2026, driven by ongoing profitability improvements.
Additionally, JPMorgan initiated coverage on Shopify Inc. (NYSE:SHOP) with an Overweight rating and a price target of $74.00 for December 2025. The firm emphasized Shopify’s significant presence in the e-commerce sector and forecasts a compounded annual revenue growth rate of 18% through 2026, as Shopify Inc. (NYSE:SHOP) continues to capitalize on the shift towards online commerce and expand its growth initiatives.
An analysis by Insider Monkey of 933 hedge fund holdings for Q1 2024 revealed 65 investments in Shopify Inc. (NYSE). The largest investor among them is GQG Partners, led by Rajiv Jain, holding 20.9 million shares valued at $1.61 billion.
8. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 65
Annual Sales Growth Over the Past 5 Years: 50.93%
Block, Inc. (NYSE:SQ), formerly known as Square Inc., is an American company founded in 2009 by Jack Dorsey and Jim McKelvey. Operating across various sectors of the financial technology industry, Block Inc. boasts a substantial presence with nearly 4 million merchants and 51 million users as of 2023.
In May 2024, Block, Inc. (NYSE:SQ) reported its first-quarter earnings, surpassing analyst expectations with revenue of $5.96 billion and an EPS of $0.85, against estimates of $5.89 billion and $0.71, respectively. The company’s announcement to reinvest its Bitcoin profits to purchase more Bitcoin further boosted investor confidence, leading to a 9% surge in share price following the results.
Following the first-quarter performance and updated full-year forecast, Deutsche Bank has increased its adjusted earnings per share estimates for Block, Inc. (NYSE:SQ) for fiscal years 2024, 2025, and 2026. The new projections raise the adjusted EPS by $0.20 to $3.67 for FY24, and by $0.31 and $0.23 to $4.77 and $5.81 for FY25 and FY26, respectively. This adjustment underscores a positive outlook on Block, Inc. (NYSE:SQ)’s financial future and its ability to achieve its Rule of 40 target, which balances growth and profitability. In addition, the Bank maintained a Buy rating and set a $90.00 price target for the stock.
An analysis of Q1 2024 hedge fund regulatory filings by Insider Monkey revealed that 65 funds held a stake in Block, Inc. (NYSE:SQ). Among them, Catherine D. Wood’s ARK Investment Management had one of the largest stakes, valued at $850 million.
7. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 73
Annual Sales Growth Over the Past 5 Years: 101.75%
Snowflake Inc. (NYSE:SNOW) kicked off the fiscal year on a positive note, surpassing revenue expectations for the first quarter. The company reported adjusted earnings per share of $0.14, which fell short of the analysts’ estimate of $0.17. Despite the EPS miss, investors were encouraged by the company’s strong revenue performance, driven by a 34% year-over-year increase in product revenue, amounting to nearly $790 million.
For the second quarter, Snowflake Inc. (NYSE:SNOW) has projected product revenue between $805 million and $810 million, reflecting a year-over-year growth of 26-27%. Looking ahead to 2025, the company has raised its product revenue forecast to $3.30 billion from the previous $3.25 billion. The first quarter also saw Snowflake’s net revenue retention rate at an impressive 128%, indicating high levels of customer satisfaction.
Snowflake Inc. has been the subject of numerous analyst reviews, particularly in light of a reported security incident, strategic developments, and financial outlooks. Citi maintained its Buy rating on Snowflake Inc. (NYSE:SNOW) with a steady price target of $236.00. This endorsement came after extensive discussions at the recent Snowflake Summit event, where Citi engaged with over 20 customers and partners. Feedback from the summit highlighted strong reception for new products such as Cortex and Iceberg, with customer enthusiasm pointing to potential growth drivers. The event also revealed a strategic shift from migration projects to exploring use cases for Generation AI (GenAI), which could drive further expansion for Snowflake Inc. (NYSE:SNOW).
As of the first quarter of 2024, Snowflake Inc. (NYSE:SNOW) was included in the portfolios of 73 hedge funds, with a total stake value of $4.21 billion. Altimeter Capital Management emerged as the largest shareholder, holding a position worth $1.66 billion.
6. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 74
Annual Sales Growth Over the Past 5 Years: 36.73%
Tesla, Inc. (NASDAQ:TSLA), headquartered in Austin, Texas, is a prominent American clean energy company, renowned for its electric vehicles. Tesla not only designs, manufactures, and sells electric vehicles (EVs), but also offers energy storage solutions, solar panels, and solar shingles.
The EV giant is set to further enhance its product lineup with the anticipated launches of the Cybertruck and Tesla Semi this year. The company’s energy division reported significant achievements in the first quarter of 2024, with margins reaching a record high of 24.6%. Energy storage deployments are projected to increase by at least 75% in 2024 compared to the previous year.
Morgan Stanley recently reiterated its Overweight rating on the TSLA stock, maintaining a price target of $310.00. Investors are keenly anticipating continued leadership from Elon Musk, who is expected to participate in the upcoming second-quarter conference call and host a robotaxi event on August 8th in Austin. Despite potential legal challenges, Musk’s influence over Tesla, Inc. (NASDAQ:TSLA) remains substantial, though he has yet to secure the 25% blocking minority voting power he aims for. Morgan Stanley suggests that further purchases or strategic financial mechanisms might be required to achieve this goal, with the firm also highlighting Musk’s considerable personal wealth, estimated at over $100 billion, which could serve as collateral for future transactions to increase his stake in Tesla, Inc. (NASDAQ:TSLA).
One of the top high growth stocks to buy, Tesla, Inc. (NASDAQ:TSLA), is held by 74 hedge funds as of Q1 2024.
Here’s what Baron Funds said about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2024 investor letter:
“The vast majority of the Fund’s underperformance this quarter stemmed from the Fund’s 10-year investment in Tesla, Inc. (NASDAQ:TSLA). Tesla’s shares fell 29.3% during the period and detracted 13.41% from the Fund’s first quarter results. Although Tesla has contributed importantly to the Fund’s performance since 2014, on occasion it has detracted from quarterly performance. In previous instances when Tesla shares have underperformed during a discrete period, they have shortly afterwards reflected the strong growth of the underlying business and the stock has appreciated considerably. We believe that will be the case again, although cannot guarantee it.
A significant decline also occurred at the end of 2022. In that instance, investors had become concerned about a host of external factors. Investors believed the company founder, visionary, and CEO Elon Musk was distracted by his acquisition of Twitter. They also believed a weak Chinese economy emerging from COVID and U.S. government policies would curtail the purchases of Tesla vehicles. These fears proved to be overblown. As the company achieved milestones in the succeeding year, the stock subsequently doubled over the next 12 months…” (Click here to read the full text)
5. MercadoLibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 79
Annual Sales Growth Over the Past 5 Years: 59.37%
MercadoLibre, Inc. (NASDAQ:MELI) is a leading e-commerce technology company in Latin America, headquartered in Buenos Aires, Argentina. Founded in 1999, MercadoLibre operates primarily through its flagship platforms, MercadoLibre.com and MercadoPago.com, offering a wide range of solutions for individuals and businesses involved in online buying, selling, advertising, and payment transactions.
In May 2024, MercadoLibre, Inc. (NASDAQ:MELI) reported impressive first-quarter earnings, with revenue reaching $4.3 billion and earnings per share (EPS) at $6.78, surpassing analyst expectations of $3.84 billion in revenue and $6.10 in EPS.
According to 14 Wall Street analysts, the average 12-month price target for MercadoLibre, Inc. (NASDAQ:MELI) is $1,921.82, with a high forecast of $2,150.00 and a low forecast of $1,450.00. This represents a potential 22.14% increase from the last trading price of $1,573.40.
For the March 2024 quarter, 79 of the 919 hedge funds tracked by Insider Monkey had investments in MercadoLibre, Inc. (NASDAQ:MELI). Among these, Rajiv Jain’s GQG Partners held a substantial stake valued at $1.2 billion.
Harding Loevner Emerging Markets Equity Strategy stated the following regarding MercadoLibre, Inc. (NASDAQ:MELI) in its first quarter 2024 investor letter:
“Another prime example of how alternative payment systems can boost a company’s core offering is MercadoLibre, Inc. (NASDAQ:MELI), Latin America’s largest online retailer, which we added to the portfolio during the quarter. Since we last wrote about the company four years ago, its management has done a great deal to further differentiate its offerings from those of rivals in a highly competitive industry, leading to market-share gains across the region. In the same way that the company built its own fulfillment infrastructure to improve the customer experience in areas where third-party delivery services were lacking, it has built its own payments and credit infrastructure to otter better shopping experiences to its customers and reduce barriers that have otherwise discouraged e-commerce adoption.
MercadoLibre started its payments business, Mercado Pago, in 2003, only four years after launching its namesake e-commerce platform. It has since become the leading private payment provider in the region, accounting for 13% of all retail sales in Latin America, both online and offline, more than any single card issuer or private form of payment other than cash. Nearly three quarters of its payments now take place outside of MercadoLibre’s online site. Mercado Pago comprises more than half of the company’s total earnings and cash flow, which has helped to fund investments elsewhere—especially in logistics—that have served to reinforce its lead in e-commerce…” (Click here to read the full text)
4. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 124
Annual Sales Growth Over the Past 5 Years: 31.41%
Based in Santa Clara, California, Advanced Micro Devices, Inc. (NASDAQ:AMD) is a leading global semiconductor company specializing in the development of computer processors and related technologies for both business and consumer markets.
Stifel reiterated its Buy rating and $200 price target on Advanced Micro Devices, Inc. (NASDAQ:AMD) in a note on June 19, despite the stock’s lagging performance compared to the broader market and rival Nvidia. Analysts acknowledge mixed sentiment around AMD due to concerns about its future performance in AI, PC, and server markets. However, the note emphasizes three key drivers for AMD’s medium-term growth: AI infrastructure investment, continued x86 CPU share gains, and AI-driven PC refresh cycles.
Conversely, some analysts are less optimistic about AMD. On June 10, Morgan Stanley downgraded Advanced Micro Devices, Inc. (NASDAQ:AMD) to Equal-Weight from Overweight, maintaining a $176 price target. While the firm still supports the overall narrative, it believes investor expectations for the AI business are too high, leaving little room for upside even if the core business recovers. Morgan Stanley also notes that AMD appears expensive compared to other large-cap AI players like NVIDIA Corporation and Broadcom Inc., where analysts have more confidence in upward revisions to AI forecasts.
In the first quarter of 2024, 124 hedge funds tracked by Insider Monkey held stakes in Advanced Micro Devices, Inc. (NASDAQ:AMD). The most significant stake was held by Ken Fisher’s Fisher Asset Management, valued at $5.2 billion.
Meridian Contrarian Fund stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its fourth quarter 2023 investor letter:
“Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor chip maker specializing in central processing units (CPUs), which are considered the core component of most computing devices, and graphics processing units (GPUs), which accelerate operations running on CPUs. We invested in 2018 when it was a mid-cap value stock plagued by many years of underperformance due to lagging technology and lost market hi share versus competitors Intel and Nvidia. Our research identified that changes and investments made by current management under CEO Lisa Su had, over several years, finally resulted in compelling technology that positioned AMD as a stronger competitor to Nvidia and that its latest products were superior to Intel’s. We invested on the the belief that AMD’s valuation at that that time did not reflect the potential for its technology leadership to generate significant market share gains and improved profits. This thesis has been playing out for several years. During the quarter, AMD unveiled more details about its upcoming GPU products for the AI market. The stock reacted positively to expectations that AMD’s GPU servers will be a viable alternative to Nvidia. Although we pared back our exposure to AMD into strength as part of our risk-management practice, we maintained a position in the stock. We believe AMD will continue to gain share in large and growing markets and is reasonably valued relative to the potential for significantly higher earnings.”
3. Uber Technologies, Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 130
Annual Sales Growth Over the Past 5 Years: 31.46%
Based in San Francisco, California, Uber Technologies, Inc. (NYSE:UBER) operates as a technology platform that connects consumers with independent ride service providers, offering a variety of transportation options such as public transit, bikes, and scooters. Additionally, Uber provides on-demand food delivery, freight services, business fleet solutions, and same-day delivery. The platform serves over 142 million monthly active consumers across 70 countries.
Uber Technologies, Inc. (NYSE:UBER) reported its Q1 results last month, with revenue rising 15.1% year-over-year to $10.13 billion, surpassing estimates by $40 million. Mobility revenue surged 30%, delivery revenue increased by 4%, while freight revenue declined by 4%. Uber is actively expanding its delivery segment through new partnerships and features to reduce its dependency on the Mobility segment.
Citi has raised its price target for Uber Technologies, Inc. (NYSE:UBER) shares to $96 from $93, maintaining a Buy rating. This adjustment follows a series of meetings with Uber’s CFO Prashanth Mahendra-Rajah and VP of Investor Relations & Corporate Finance Deepa Subramanian during a non-deal roadshow (NDR) in the Middle East. These discussions strengthened Citi’s confidence in Uber Technologies, Inc. (NYSE:UBER)’s ability to achieve its compounded annual growth rate targets for Gross Bookings and EBITDA over the next three years, as outlined in the company’s February Investor Update.
However, on another front, the company faces a significant legal challenge, with the 9th U.S. Circuit Court of Appeals in San Francisco upholding a lower court’s decision regarding California’s gig worker law, which requires companies to reclassify their drivers from independent contractors to employees. This ruling could potentially increase operating costs for companies like Uber Technologies, Inc. (NYSE:UBER).
In Q1 of 2024, 130 hedge funds had investments in Uber Technologies, Inc. (NYSE:UBER), with positions worth $10.1 billion. GQG Partners is the top investor in the company as of March 31, and has a position worth $1.72 billion.
RiverPark Large Growth Fund stated the following regarding Uber Technologies, Inc. (NYSE:UBER) in its first quarter 2024 investor letter:
“Uber Technologies, Inc. (NYSE:UBER): UBER was a top contributor in the quarter following better than expected 4Q23 earnings and 1Q24 guidance. Gross bookings of $37.6 billion were up 22% year over year. Mobility gross bookings of $19.3 billion grew 29% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $17 billion were up 19% from last year and continued to be strong throughout the quarter. 4Q Adjusted EBITDA of $1.3 billion, up $618 million year over year, was better than management’s guidance of $1.2 billion, and the company generated $768 million of free cash flow, up from a cash loss of $303 million last year. Management guided to continuing growth in 1Q Gross Bookings (20% growth) and Adjusted EBITDA (of $1.3 billion). The company hosted a well-received analyst day in February during which it guided to three year compounded annual growth rates for gross bookings of mid-to-high single digits and EBITDA of 30-40%, both above investor expectations. The company also guided to free cash flow conversion of 90% of EBITDA.
UBER remains the undisputed global leader in ride sharing, with a greater than 50% share in every major region in which it operates. The company is also a leader in food delivery, where it is number one or two in the more than 25 countries in which it operates. Moreover, after a history of losses, the company is now profitable, delivering expanding margins and substantial free cash flow. We view UBER as more than a ride sharing and food delivery service; we also see it as a global mobility platform with 142 million users (by comparison, Amazon Prime has 200 million members) and the ability to penetrate new markets of on-demand services, such as package and grocery delivery, travel, and hourly worker staffing. Given its $5.4 billion of unrestricted cash and $4.8 billion of investments, the company today has an enterprise value of $165 billion, indicating that UBER trades at 21x our estimates of next year’s free cash flow.”
2. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 154
Annual Sales Growth Over the Past 5 Years: 21.44%
Salesforce, Inc. (NYSE:CRM) stands out as a leading American provider of cloud-based software, specializing in customer relationship management (CRM) solutions. The company offers a comprehensive suite of software and applications designed for sales, customer service, marketing automation, e-commerce, analytics, and application development, addressing a wide range of business needs.
In its fiscal 2025 first-quarter earnings report, Salesforce, Inc. (NYSE:CRM) reported an 11% year-over-year revenue growth, reaching $9.13 billion. The subscription and support segment saw a 12% increase, significantly bolstering the company’s performance. Despite a challenging economic environment, the company maintained its full-year revenue guidance of $37.7 billion to $38 billion. Key growth drivers included the company’s focus on AI transformation and strategic investments, supported by the management of over 250 petabytes of customer data. Notably, Salesforce, Inc. (NYSE:CRM)’s Data Cloud has been particularly impactful, with 25% of large deals incorporating it. International expansion and multi-cloud deals were also highlighted as significant growth factors. For FY25, Salesforce, Inc. (NYSE:CRM) expects a non-GAAP operating margin of 32.5% and a GAAP operating margin of approximately 20%, along with anticipated operating cash flow growth between 21% and 24%.
Additionally, Oppenheimer reaffirmed its positive outlook on CRM, maintaining an Outperform rating and a price target of $280.00. This endorsement followed a meeting with Salesforce, Inc. (NYSE:CRM)’s Senior Vice President for Product Management, Generative AI and Search, Kaushal Kurapati, during Oppenheimer’s Annual Software Bus Tour. The discussions provided insights into the company’s strategic focus and product development, especially in artificial intelligence (AI) and data management. The analyst emphasized Salesforce, Inc. (NYSE:CRM)’s large and established customer base as a key advantage, supporting growth driven by the increasing adoption of AI technologies and the demand for comprehensive, industry-specific solutions.
Harding Loevner Global Equity Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its first quarter 2024 investor letter:
“Leading software companies have the advantage of high switching costs and the ability to incorporate new features into products customers already use. For example, Microsoft has added its Copilot chatbot functionality to everything from search (Bing Chat, recently renamed to just Copilot) to coding (GitHub Copilot) and workplace applications (Copilot for Microsoft 365). Software sold by Microsoft and other companies such as Salesforce, Inc. (NYSE:CRM), SAP, and ServiceNow are also already deeply integrated into their customers’ operations and workflow.
As large enterprises search for the right balance, Salesforce’s Data Cloud, a flagship offering, is designed to address a critical issue for them so they can make better use of AI tools. After a hectic buildout over the last few years of “data warehouses” and “data lakes”—two types of repositories for storing and processing data—across the various business units of large companies, many companies are left with what feels like islands of trapped data. Data Cloud solves this by creating a single platform to access and leverage all of an enterprise’s data, eliminating the need to constantly duplicate large amounts of information across different platforms. Users are then able to apply generative-AI technology, such as Salesforce’s Einstein tool, to a more comprehensive dataset, which enables them to better glean customers’ intentions, personalize marketing messages, and automate the processing of customer-service requests. As users build these systems, Einstein’s copiloting functionality helps their programmers work more efficiently so that IT departments with limited budgets and manpower can still develop the necessary tools. Salesforce’s management projects that revenue and earnings will climb about 9% and 45%, respectively, in fiscal 2025, citing the company’s operating leverage and cost discipline. We think these figures are achievable given the renewed focus on profitable growth, and so we added to the stock during the quarter.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 186
Annual Sales Growth Over the Past 5 Years: 46.68%
Headquartered in Santa Clara, California, NVIDIA Corporation (NASDAQ:NVDA) is a leading multinational technology company renowned for designing and selling GPUs (Graphics Processing Units) used in gaming, cryptocurrency mining, and professional applications. NVIDIA also develops chip systems for various sectors, including automotive, robotics, and other technologies.
NVIDIA Corporation (NASDAQ:NVDA)’s stock has maintained its impressive rally this year, pushing the AI chip leader’s valuation past $3 trillion, surpassing tech giants like Microsoft and Apple. The surge was further fueled by a bullish call from Rosenblatt Securities, which raised its price target on the NVDA stock to a street-high of $200, up from $140, indicating nearly 50% upside from its current price.
Rosenblatt’s price target hike reflects a strong outlook for NVIDIA Corporation (NASDAQ:NVDA)’s earnings, predicting that the company’s earnings per share will exceed $5 by 2026. The firm forecasts continued market share gains for tech giant from both existing and upcoming AI chips. Key products like Hopper, Blackwell, and Rubin are expected to help NVIDIA bolster its market position, with future gains anticipated in AI-related infrastructure, including adjacent networking Switch/NiC/DPU segments. Rosenblatt also highlights NVIDIA Corporation (NASDAQ:NVDA)’s software, which complements its hardware and is pivotal to its future growth narrative.
In the first quarter of this year, Insider Monkey’s research showed that 186 out of 919 hedge funds had invested in NVIDIA Corporation (NASDAQ:NVDA). Among these, Rajiv Jain’s GQG Partners was the largest shareholder, with a $12.07 billion investment in the company.
While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA Corporation (NASDAQ:NVDA) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None.
