In this article, we will take a look at the 10 Best Major Stocks to Buy According to Hedge Funds.
After a notable growth of 25% for the broader market in 2024, the S&P 500 index gained a little under 4% in the first month of 2025. The stock market had a mixed start to 2025 after the U.S. tech companies took a massive hit from the launch of Deepseek’s R1 AI model. Despite a major blow, the tech-heavy NASDAQ 100 index has gained over 4.50% year-to-date.
Also Read: 10 Large-Cap Stocks Insiders Are Selling Recently
Inflation and Tariff Concerns
U.S. stocks fell on February 12 following the release of January inflation data. The consumer-price index (CPI) soared 3% in January from a year ago, exceeding economists’ estimates. The data has somewhat stoked investors’ concerns about price pressures and the worry that interest rates might not come down as expected.
January CPI usually indicates big price adjustments made by businesses at the start of the year. Moreover, the beginning of a new administration has an impact on businesses. According to Goldman Sachs Research’s chief US equity strategist David Kostin, every five-percentage-point increase in the US tariff rate is estimated to reduce S&P 500 EPS by roughly 1-2%.
Therefore, if the U.S. administration sustains the proposed tariff rates, a 25% tariff on imported goods from Mexico and Canada and an additional 10% tariff on imports from China would reduce S&P 500 EPS forecasts by nearly 2-3%, as per Goldman’s Research.
However, the tariff policy doesn’t slow down the AI investment by the U.S. tech giants as they continue to expand their AI-related services and products. Four out of the Big Five companies are projected to invest over $300 billion in 2025 building data centers to fuel the AI boom.
With that let’s take a look at the 10 Best Major Stocks to Buy According to Hedge Funds.
Photo by Pascal Bernardon on Unsplash
Our Methodology
We have listed the top 10 best major stocks based on hedge fund sentiment, according to Insider Monkey’s database. The best major stocks are ranked in ascending order of the number of hedge fund holders, as of Q3 2024.
Why do we care about what hedge funds do? 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 Major Stocks to Buy According to Hedge Funds
10. Mastercard Incorporated (NYSE:MA)
No. of Hedge Fund Holders: 131
Mastercard Incorporated (NYSE:MA) is a financial service provider that connects consumers, financial institutions, merchants, governments, and businesses worldwide. The company allows users to make payments by creating various payment solutions and services using its brands including MasterCard, Maestro, and Cirrus. Mastercard’s Q4 2024 earnings highlight its continued strength as a leader in the payments sector, posting a notable 12% volume growth and a 6% rise in card circulation.
According to The Nilson Report, credit card purchase volume amounted to $19.6 trillion in 2023, with Visa leading the market having 1.3 billion credit cards followed by Mastercard with 1.1 billion credit cards. MA makes up 32% of all credit cards in the world. Mastercard’s global purchase volume by credit was around $4 trillion or 21% of the total market in 2023.
Mastercard Incorporated’s (NYSE:MA) strong position and dominance in the market make it one of the best major stocks. On February 4, Wells Fargo analyst Donald Fandetti raised the price target on MA shares from $585 to $625 and kept an Overweight rating on the shares. The analyst remains bullish following the company’s strong quarterly results and 2025 revenue guidance, with the management expecting the net revenue to grow at the high end of low double digits.
9. Uber Technologies, Inc. (NYSE:UBER)
No. of Hedge Fund Holders: 136
Uber Technologies, Inc. (NYSE:UBER) is a technology company that offers ride-sharing and ride-hailing services through its platform. Uber Eats is another major service offered by the company that connects consumers and restaurants, grocers, and other merchants for online orders.
Uber Technologies, Inc. holds a solid position in the global and U.S. ride-hailing markets, with over 25% of the global market and a remarkable 76% share in the U.S. market. The company’s large network of more than 171 million users and a massive pool of drivers make it a market leader.
On February 6, Cantor Fitzgerald analyst Reni Benjamin reiterated an Overweight rating on UBER shares with a price target of $80 per share. Benjamin kept this rating following the company’s strong results for the fourth quarter of 2024. Uber Technologies, Inc. (NYSE:UBER) posted a significant increase in its Gross Bookings, which saw an 18% growth year-over-year to $44.2 billion. The company’s Q4 2024 revenue reached $12 billion, exceeding the analyst estimate of $11.76 billion. The revenue was mainly driven by record demand in both the Mobility and Delivery segments. Uber also noted a massive increase of 122% year-over-year in FCF reflecting Uber’s strong cash generation capabilities. Moreover, the company’s operating cash flow reached $1.8 billion, indicating a notable improvement in cash flow management and operational efficiency.
8. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
No. of Hedge Fund Holders: 158
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a Taiwanese company that designs and manufactures semiconductors. The company manufactures products for various applications that target a wide range of end markets including high-performance computing, smartphones, the Internet of Things (IoT), automotive, and digital consumer electronics. TSM holds a major share in contract chip manufacturing and advanced chip manufacturing.
On January 17, Barclays analyst Simon Coles upgraded the price target on TSM shares from $240 to $255 and gave the company an Overweight rating. The analyst kept the rating following the company’s strong Q4 2024 results. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) solidified its position as the leading semiconductor manufacturer, with strong demand for advanced process nodes driving revenue growth. TSMC’s Q4 revenue soared by 37% year-over-year to $26.88 billion, driven by increased sales of 3nm and 5nm technologies. The company’s gross margin for Q4 was 59%, fueled by higher capacity utilization and productivity gains. In addition to that, the company maintains its dominance in cutting-edge semiconductor technology, with its advanced technologies accounting for 74% of wafer revenue in Q4.
Wedgewood Partners, an investment management company, discussed Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q4 2024 investor letter and said:
“Taiwan Semiconductor Manufacturing was another top contributor to performance during the quarter and for the year. The Company’s earnings growth dramatically accelerated compared to last year as the Company’s wafer fabrication and packaging volumes soared in 2024. In addition, the Company’s customer prices rebounded in the face of more normalized capital expenditures. The Company maintains a near-monopoly in the fabrication of nearly every new AI accelerator brought to market over the past two years. They continue investing tens of billions in building and 7ill future capacity with orders for what seems to be insatiable hyperscale demand for accelerated computing. The stock ended the year trading at a consensus forward earnings multiple that is several points lower than large-cap growth benchmarks, despite the Company’s dominant position in the most important industry that is driving one of the largest technological shifts in a generation.”
7. Apple Inc. (NASDAQ:AAPL)
No. of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a technology company that designs, manufactures, and sells smartphones, personal computers, tablets, wearables, and accessories and sells a variety of related services. The iPhone maker has recently launched its intelligence system, Apple Intelligence.
On February 11, Morgan Stanley analyst Erik Woodring reiterated a Buy rating on AAPL shares and set a price target of $275. Wooding’s buy rating on AAPL shares is mainly motivated by the company’s performance and future potential of its iPhone lineup. Apple Intelligence is reportedly getting attention among iPhone users in the U.S. as the demand surges. In addition to that, the company’s strong positioning in non-China emerging markets and the company’s growing presence in China will further reinforce iPhone demand projections.
“As a result, we’d conclude that while yes, Apple Intelligence did appear to provide a small tailwind to eligible iPhones in markets where available (the U.S.) during the holiday quarter, it was almost entirely due to U.S. consumers accelerating purchases of the discounted 1 year old iPhone 15 Pro/Pro Max.”
-Morgan Stanley
In addition to the company’s iPhone demand, Apple is also expanding its cloud business and planning to launch Apple TV+ on Android, expanding its streaming reach.
6. Visa Inc. (NYSE:V)
No. of Hedge Fund Holders: 165
Visa Inc. (NYSE:V) is a multinational payment card service company that offers a wide range of related services and products to its consumers. The company’s growth is largely driven by the global shift towards digital payments, a trend fueled by technological advancements. According to the Federal Reserve, cash use plunged to 16% of transactions in 2024, indicating the growing preference for digital payments. The newer generation prefers digital payments, thus driving growth for card payment service providers.
On February 3, Barclays analyst Ramsey El-Assal raised the price target on V shares from $361 to $396, maintaining an Overweight rating on the stock. The analyst upgraded the price target on Visa shares following another strong quarter. In fiscal Q1 2025, the company posted $9.5 billion in revenue, up by 10% year-over-year. Visa Inc. (NYSE:V) processed 63.8 billion transactions in Q1 FY2025, reflecting an 11% growth from a year ago. Visa’s payment volume also experienced a 9% year-over-year increase on a constant-dollar basis.
Visa dominates the card market and continues to have a strong cash position. By the end of Q1, the company had over $16 billion in cash and cash equivalents, while operating cash flow reached $5.4 billion, up from $3.6 billion in Q1 FY2024. During the quarter, the company returned over $5.11 billion to shareholders through dividends and share buybacks.
5. NVIDIA Corporation (NASDAQ:NVDA)
No. of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) is the leading GPU manufacturer and produces high-end units that are widely used in AI. The chipmaker has also entered the robotics segment with continuous development of its Isaac™ robotics platform. This platform supports application in research, development, and production of the next generation of Al-enabled autonomous machines and robots. Companies such as BYD Electronics, Siemens, Teradyne Robotics, and Intrinsic, are using the NVIDIA Isaac Robotics Platform for autonomous robot arms, humanoids, and mobile robots. However, the company’s GPU segment remains the core business amid increasing demand from AI companies.
On January 28, Morgan Stanley analyst Joseph Moore lowered its price target on NVDA shares from $166 to $152, maintaining an Overweight rating. Moore pointed out that DeepSeek’s R1 AI model could introduce cost-reducing innovations in AI, which may impact NVIDIA. Although analysts have lowered the price target on NVDA, they are still optimistic about the company’s strong position in the semiconductor market and its dominance in the AI sector. Tigress Financial analyst Ivan Feinseth has raised the price target of NVDA shares from $170 to $220, upgrading the rating from Buy to Strong Buy. Feinseth anticipates the company’s growing leadership in AI as a main catalyst for revenue expansion.
In the long term, NVIDIA remains a top stock and can be a good buy considering the recent drop in its price. The rising demand for data centres and AI will continue to drive the demand for NVIDIA’s GPUs.
4. Alphabet Inc. (NASDAQ:GOOGL)
No. of Hedge Fund Holders: 202
Alphabet Inc. (NASDAQ:GOOGL) operates as a holding company and operates through subsidiaries. The company offers web-based searches, advertisements, software applications, enterprise solutions, commerce, and hardware products.
On February 5, Needham analyst Laura Martin maintained a price target of $225 on GOOGL shares, maintaining a Buy rating. Analysts believe that Alphabet Inc.’s (NASDAQ:GOOGL) growing cloud business makes it a promising stock. Martin remains bullish on the stock as the company posted strong revenue growth of 12% year-over-year in Q4 2024. The company revenue was mainly driven by robust performance in Google Search and Cloud. During Q4, Alphabet Inc.’s (NASDAQ:GOOGL) Cloud and YouTube businesses generated over $110 billion in combined annual revenue. The company’s cloud business experienced a 30% revenue increase, driven by strong demand for AI-powered solutions and strategic deals over $1 billion.
Alphabet Inc.’s (NASDAQ:GOOGL) cloud business and UiPath Inc. (NYSE:PATH) are collaborating to help customers transform their enterprises with AI-powered automation. Oakmark Funds 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.”
3. Meta Platforms, Inc. (NASDAQ:META)
No. of Hedge Fund Holders: 235
Meta Platforms, Inc. (NASDAQ:META) is a global technology company that connects people and shares, finds communities and grows businesses. The company owns Instagram, Whatsapp, Facebook, Messenger, and Thread applications.
On February 11, Tigress Financial analyst Ivan Feinseth upgraded the price target on META shares from $645 to $935 and kept a Strong Buy rating on the shares. The analyst keeps a strong buy rating as Meta is exploring AI-driven opportunities for its social media platforms. Feinseth sees a significant upside, driven by the company’s ongoing potential to monetize many of its critical applications and technologies.
Meta Platforms, Inc. (NASDAQ:META) has made an accounting shift which is expected to reduce its depreciation expense by $2.9 billion in 2025. This will increase the company’s estimated pre-tax profits by 4% for 2025. Moreover, the company is planning to spend over 75% on capital expenditures to enhance its AI capabilities.
2. Microsoft Corporation (NASDAQ:MSFT)
No. of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is a leading developer of computer software, operating systems, artificial intelligence, and cloud computing. The company’s strongest unit is its cloud business, which generates the most revenue.
On February 11, Microsoft Corporation (NASDAQ:MSFT) announced an expanded partnership with Anduril, an American defense technology company, to begin the next phase of the U.S. Army’s Integrated Visual Augmentation System (IVAS) program. This deal will allow Microsoft Azure to be Anduril’s go-to hyperscale cloud for all workloads related to IVAS and Anduril AI technologies.
RiverPark Advisors, an investment advisory firm, discussed Microsoft Corporation (NASDAQ:MSFT) in its “RiverPark Large Growth Fund” third quarter 2024 investor letter. The investment firm noted that MSFT is expected to accelerate growth in the second half of fiscal 2025 as more AI capacity comes online. RiverPark Advisors highlighted that the company’s cloud-based services are now generating the most revenue. Here is what RiverPark Advisors mentioned in the Q3 2024 investor letter.
“Cloud-based services have become the company’s largest revenue and earnings producer. The company’s Azure platform alone has the potential to grow to more than $200 billion in annual revenue over the next decade. Overall, we believe that the company will continue to deliver double-digit revenue and EPS growth and generate an enormous amount of free cash flow to return to shareholders and use for acquisitions.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
No. of Hedge Fund Holders: 286
Amazon.com, Inc. (NASDAQ:AMZN) is a leading technology company with the largest e-commerce and cloud computing businesses in the world. The company also offers other services, including digital streaming and artificial intelligence solutions.
On February 12, Loop Capital lifted the price target on AMZN shares from $275 to $285, keeping a Buy rating on the stock. The firm’s price target upgrade follows AMZN’s Q4 2024 beat last week, indicating a bullish outlook on Amazon Web Services (AWS) and Amazon’s AI strategy, which is positively influencing its business, from cloud computing to advertising to e-commerce. The company plans to invest over $100 billion in AI initiatives in 2025, and a massive CapEx will go toward supporting AI for AWS.
The company’s AI-related AWS business is growing at triple-digit percentage rates annually. Amazon’s CEO Andy Jassy sees the AI development as a once-in-a-lifetime opportunity. This is a major reason analysts remain bullish on AMZN.
While we acknowledge the potential of AMZN to grow, our conviction lies in the belief that 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 AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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