In this article, we will discuss the 10 Best Momentum Stocks to Buy According to Hedge Funds.
In the fast-paced world of investing, momentum is a force that can propel portfolios to new heights—or leave them vulnerable to abrupt reversals. Momentum investing, a strategy centered on capitalizing on upward-trending stocks, has gained renewed attention as markets navigate economic uncertainty, technological disruption, and shifting consumer behaviors. For investors seeking to harness this strategy, the choices of hedge funds—often regarded as the “smart money” on Wall Street—offer a compelling roadmap. These institutions deploy vast resources, cutting-edge analytics, and seasoned expertise to identify stocks with the potential to sustain momentum.
The Allure of Momentum Investing:
Momentum investing is based on the idea that stocks with strong recent performance are likely to keep rising. This momentum is driven by factors such as positive earnings surprises, favorable sector trends, or shifts in the economy. Unlike value investing, which focuses on undervalued stocks, momentum investing capitalizes on market psychology, riding waves of optimism and institutional buying.
Why Hedge Funds Matter:
Hedge funds manage billions in assets and employ teams of analysts, quantitative models, and proprietary data to stay ahead of trends. Their stock picks often reflect deep conviction in a company’s fundamentals, competitive edge, or alignment with transformative themes like artificial intelligence (AI), renewable energy, or healthcare innovation. When multiple hedge funds converge on a stock, it signals collective confidence in its momentum potential. Moreover, their filings—such as quarterly 13F disclosures—provide a window into their strategies, offering retail investors actionable insights. While past performance is no guarantee, tracking these moves may help identify high-conviction opportunities poised for sustained growth.
Growth of Momentum Stocks:
Momentum stocks have experienced significant growth recently, driven by advancements in artificial intelligence, healthcare, and digital transformation. In 2024, momentum investing emerged as one of the top-performing strategies, with high-momentum stocks outperforming low-momentum ones by 28% year-over-year as of December 11, 2024, as reported by Morgan Stanley.
Hedge funds have been instrumental in this trend, significantly increasing their investments in momentum-driven sectors. For instance, hedge funds boosted their exposure to financial firms by 50%, totaling $340 billion, contributing to a 33% surge in the NASDAQ Bank Index, which outpaced both the broader market and the tech-heavy Nasdaq.
The power of momentum investing is particularly evident in sectors like technology, with companies leading the charge in artificial intelligence and cloud computing. For instance, during the first three quarters of 2024, AI-related startups raised $6 billion, accounting for 14.6% of total climate tech investment, according to a report by PwC. With this in mind, let’s take a look at some of the best momentum stocks.
Stock market charts. Photo by Kaboompics.com on Pexels
Our Methodology
For this list, we analyzed the holdings of the iShares MSCI USA Momentum Factor ETF (MTUM), which targets U.S. stocks exhibiting strong momentum based on factors like price and earnings growth. We then cross-referenced these holdings with Insider Monkey’s Q3 2024 hedge fund database to identify which companies in the ETF had the highest number of hedge fund investors. By ranking these companies based on the number of hedge funds holding positions, we compiled a list of momentum stocks that show strong performance trends and are favored by most 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. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 91
Vertiv Holdings Co (NYSE:VRT) is a global leader in providing critical infrastructure technologies and services for data centers, communication networks, and commercial and industrial facilities. The company offers a wide range of products and solutions, including power, thermal, and IT infrastructure management.
Vertiv Holdings Co. (NYSE:VRT) is strengthening its position in the digital infrastructure market with strategic acquisitions, partnerships, and new product offerings. Its recent acquisition of BiXin Energy’s centrifugal chiller technology boosts its ability to support high-performance computing and AI applications. This positions the company to meet the increasing demand in these areas. The company also launched its Liquid Cooling Services portfolio, addressing the growing need for cooling in high-density computing, especially in AI and high-performance computing. With these efforts, Vertiv Holdings Co (NYSE:VRT) is well-positioned to benefit from the ongoing digital transformation.
Vertiv Holdings Co (NYSE:VRT) reported solid Q4 2024 results with a 77% increase in adjusted EPS to $0.99. Net sales grew by 26%, reaching $2.35 billion, while operating profit surged 60% to $457 million. The company also achieved strong cash flow, with an adjusted free cash flow of $362 million in Q4. For 2025, Vertiv Holdings Co (NYSE:VRT) expects a 25% increase in adjusted EPS, with a forecast of $3.50 to $3.60.
Chris Snyder of Morgan Stanley initiated coverage on Vertiv Holdings Co (NYSE:VRT) with a “Buy” rating and a price target of $150, implying a potential upside of 37.26%.
9. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 91
Oracle Corporation (NYSE:ORCL) is a global leader in cloud computing and enterprise software solutions, renowned for its comprehensive suite of products and services. The company offers database management systems, cloud infrastructure, and applications, catering to businesses of all sizes. ORCL is one of the best momentum stocks on our list.
Oracle Corporation (NYSE:ORCL) is working to expand its technological footprint and global reach. The company continues to enhance its cloud infrastructure, recently announcing the addition of eight new regions and advanced features for the company’s Database@Google Cloud. Moreover, it has deepened its commitment to artificial intelligence by participating in the launch of Stargate, a $500 billion joint venture with OpenAI and SoftBank to invest in AI infrastructure across the U.S.
Oracle Corporation (NYSE:ORCL) reported strong Q2 fiscal 2025 results, with total revenue reaching $14.1 billion, up 9% year-over-year, driven by a 12% increase in cloud services and license support revenues. The company’s operating income for the quarter was $4.2 billion, while GAAP earnings per share (EPS) rose 24% to $1.10. Non-GAAP EPS increased by 10% to $1.47. Oracle Corporation (NYSE:ORCL)’s cloud infrastructure business saw impressive growth, with revenue up 52%, reflecting the strong demand for AI solutions.
8. Boston Scientific Corporation (NYSE:BSX)
Number of Hedge Fund Holders: 92
Boston Scientific Corporation (NYSE:BSX) is a global leader in the development of medical devices that are used to treat a wide range of medical conditions. With a strong focus on innovation, the company offers solutions across various therapeutic areas, including cardiology, endoscopy, urology, and neuromodulation. In the past 12 months, the stock has surged by nearly 61%, which makes it one of the best momentum stocks.
Boston Scientific Corporation (NYSE:BSX) continues to make significant strides in expanding its product portfolio and enhancing its market position through strategic initiatives. In January 2025, the company made waves by announcing its acquisition of Bolt Medical, Inc., a move designed to strengthen its cardiovascular offerings and address critical heart conditions like coronary and peripheral artery diseases. Alongside acquisitions, Boston Scientific Corporation (NYSE:BSX) is advancing its clinical trials, notably with the FARAPULSE™ Pulsed Field Ablation System, which has shown promising results in the ADVANTAGE AF trial for atrial fibrillation.
Boston Scientific Corporation (NYSE:BSX) reported fourth quarter and full year 2024 financials on Feb 5, 2025. The company generated $4.561 billion in net sales for Q4, a 22.4% increase year-over-year. For the full year, it delivered $16.747 billion in net sales, reflecting a 17.6% growth, while its adjusted EPS rose to $2.51, up from $2.05 in 2023. Notably, the company’s Cardiovascular segment saw exceptional growth, with organic sales up 27.4%.
According to the Insider Monkey Q3 2024 hedge fund database, 92 hedge funds held positions in Boston Scientific Corporation (NYSE:BSX).
7. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 93
Booking Holdings Inc. (NASDAQ:BKNG) is a leading global online travel agency that offers a wide range of services, including hotel reservations, flight bookings, and car rentals. With a portfolio of well-known brands such as Booking.com, Priceline, and Kayak, the company serves millions of travelers worldwide.
In the third-quarter 2024 results, Booking Holdings Inc. (NASDAQ:BKNG) saw a 9% year-over-year increase in gross travel bookings, reaching $43.4 billion, while total revenues also rose by 9% to $8.0 billion. Net income remained steady at $2.5 billion, with EPS growing 7% to $74.34, reflecting the company’s ability to maintain profitability while expanding. Adjusted net income surged 9% to $2.8 billion, with adjusted EPS climbing 16% to $83.89, driven by operational efficiencies. BKNG is one of the best momentum stocks on our list.
Booking Holdings Inc. (NASDAQ:BKNG) continues to evolve its business operations through strategic initiatives to enhance efficiency and capitalize on emerging trends. The company recently unveiled plans to reduce costs by approximately $400-$450 million over the next few years, focusing on process optimization and real estate footprint reduction. In parallel, the company is aggressively integrating artificial intelligence across its brands—Booking.com, Priceline, Kayak, Agoda, and OpenTable—to improve customer service and streamline operations.
Scott Devitt of Wedbush maintained a “Buy” rating on Booking Holdings Inc. (NASDAQ:BKNG), raising the price target from $5,000 to $5,500, a 9.81% increase.
6. GE Aerospace (NYSE:GE)
Number of Hedge Fund Holders: 95
GE Aerospace (NYSE:GE) designs and manufactures cutting-edge jet engines, propulsion systems, and avionics for commercial, military, and industrial applications. The company is renowned for its innovation, delivering high-performance products that drive efficiency and sustainability in the aerospace sector.
GE Aerospace (NYSE:GE), one of the best momentum stocks, reported robust fourth-quarter 2024 earnings, with sales hitting $9.9 billion and operating profits of $2 billion, exceeding Wall Street expectations. The company achieved a remarkable 46% growth in total orders, amounting to $15.5 billion. Adjusted revenue for the quarter surged 16% year-over-year, while operating profit saw a substantial 49% increase, reflecting the company’s solid operational execution.
Recent innovations, including certification for enhanced durability in its LEAP-1A engines, underscore the company’s commitment to technological advancement, while strategic investments in next-gen propulsion systems signal further growth potential. As GE Aerospace (NYSE:GE) continues to lead in engine performance and drive efficiency in the aerospace sector, its strong financial position and forward-looking initiatives make it a key player to watch in the industry.
5. Progressive Corp. (NYSE:PGR)
Number of Hedge Fund Holders: 95
Progressive Corp. (NYSE:PGR) is one of the largest providers of auto insurance in the United States, offering a wide range of insurance products, including car, home, renters, and motorcycle insurance. The company is known for its innovative approach to pricing, using data-driven models to assess risk and offer competitive rates.
Progressive Corp. (NYSE:PGR) is addressing a significant data breach settlement, agreeing to a $3.25 million payout for customers affected by a breach that occurred between 2021 and 2023. This settlement, expected to provide impacted individuals up to $5,000, is scheduled for final approval later in February 2025.
For Q4 2024, Progressive Corp. (NYSE:PGR) saw good growth with net income rising 5% to $942 million and a 19% increase in quarterly net income, fueled by a 20% jump in net premiums written, reaching $18.1 billion. Additionally, the company saw continued expansion in policies, with a notable 18% year-over-year increase in policies in force, signaling strong customer growth across both personal and commercial insurance segments.
4. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 97
Vistra Corp. (NYSE:VST) is a leading energy company primarily engaged in the generation and retail of electricity. It operates through a diversified portfolio of power generation facilities, including natural gas, coal, and renewable energy sources.
Vistra Corp. (NYSE:VST) has seen a mix of developments in the last few months, with both challenges and growth drivers. A fire at its Moss Landing Energy Storage Facility in California in mid-January 2025 raised concerns about safety, as the blaze prompted the evacuation of 1,500 people. Fortunately, no injuries were reported, and the fire was contained, but the incident has prompted an ongoing investigation.
On a positive note, Vistra Corp. (NYSE:VST) is set to report its full-year and fourth-quarter 2024 financial results on February 27, with analysts optimistic about the company’s performance. Evercore ISI recently resumed coverage of the stock with an “Outperform” rating, driven by the company’s solid position in the power generation market and growth in cash flow and EBITDA.
As of Q3 2024, Vistra Corp. (NYSE:VST) is being closely watched by institutional investors, with 97 hedge funds holding a position in the stock, according to the Insider Monkey Q3 2024 hedge fund database.
3. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 105
JPMorgan Chase & Co. (NYSE:JPM) is one of the largest and most influential financial institutions in the world. The company offers a wide range of services, including investment banking, asset management, private banking, and commercial banking. As a leader in the global financial services industry, the company operates in more than 100 countries and serves millions of clients, from individuals to corporations and governments.
JPMorgan Chase & Co. (NYSE:JPM) has been involved in several significant developments recently. CEO Jamie Dimon has continued to advocate for a five-day in-office work policy, emphasizing the importance of efficiency and decision-making, despite employee pushback. Meanwhile, the bank is expanding its consumer banking services to Germany, aiming to introduce its digital-first approach in a major European market by 2025-2026. The company is also expanding its reach domestically, planning to open 100 branches in low-income areas across the U.S.
Financially, JPMorgan Chase & Co. (NYSE:JPM) reported strong fourth-quarter results for 2024, with net income of $14.0 billion contributing to a record full-year net income of $58.5 billion. The firm showed impressive revenue growth of $42.8 billion, supported by strong performance across its business segments, including a 49% year-over-year increase in Investment Banking fees. JPMorgan Chase & Co. (NYSE:JPM)’s strong financial position, along with strategic growth in core areas like Payments, Banking, and Asset Management, makes it one of the best momentum stocks.
2. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Broadcom Inc. (NASDAQ:AVGO) is a global technology company that designs, develops, and supplies a wide range of semiconductor and infrastructure software solutions. Known for its leadership in the semiconductor industry, the company plays a key role in powering innovations across various sectors, including networking, data centers, wireless communications, and broadband.
Broadcom Inc. (NASDAQ:AVGO) has been making notable strides in recent months, with strong financial performance and key technological advancements. In the fourth quarter of fiscal year 2024, the company reported a 51% year-over-year increase in revenue, reaching almost $14.1 billion. This growth was driven by a 12% rise in semiconductor solutions and a 196% surge in infrastructure software revenue. The company also announced an 11% increase in its quarterly dividend to $0.59 per share for fiscal year 2025.
Broadcom Inc. (NASDAQ:AVGO)’s strategic purchase of VMware has bolstered its market position, with VMware’s operating margin reaching an impressive 70%. The company is positioning itself for significant growth in the AI industry, with projections suggesting a serviceable addressable market of $60 to $90 billion by fiscal 2027. This growth is primarily fueled by key partnerships with significant hyperscalers, including Google, Meta Platforms, and ByteDance.
Currently, 128 hedge funds within the Insider Monkey Q3 2024 database held a position in the stock.
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) is a global leader in artificial intelligence, graphics processing units (GPUs), and high-performance computing. Renowned for revolutionizing gaming, data centers, and AI technologies, the company continues to drive innovation across industries, from autonomous vehicles to cloud computing.
Over the last 5 years, NVIDIA Corporation (NASDAQ:NVDA) has provided a total return of a whopping 1,779.83% compared to a meager 80.16% return from the broader market, which makes NVDA one of the best momentum stocks. The company reported impressive financial results for Q3 FY2025, with record quarterly revenue of $35.1 billion, reflecting a 17% increase from Q2 and a 94% surge from the previous year. Data Center revenue was particularly strong, reaching $30.8 billion, up 17% from Q2 and up 112% year-over-year. The company posted GAAP earnings per share (EPS) of $0.78, up 16% from the previous quarter and up 111% from the same period last year.
NVIDIA Corporation (NASDAQ:NVDA) has launched the GeForce RTX 50 series, a leap over the 40 series, featuring enhanced AI capabilities and significant performance improvements through DLSS 4. Despite growing competition from emerging companies like DeepSeek, the company remains dominant in the AI hardware market, bolstered by its robust software ecosystem, including CUDA. Additionally, the company is leveraging synthetic data to train AI models and innovate in biomedicine with AI-designed proteins. With these advancements, NVIDIA Corporation (NASDAQ:NVDA) is not only maintaining its leadership in graphics but also positioning itself at the forefront of AI, healthcare, and cloud gaming.
Blayne Curtis of Barclays maintains a “Buy” rating on NVIDIA Corporation (NASDAQ:NVDA), raising the price target from $160 to $175, indicating a potential upside of 29.03%.
Overall NVIDIA Corporation (NASDAQ:NVDA) ranks first on our list of the 10 Best Momentum Stocks to Buy According to Hedge Funds. While we acknowledge the potential for NVIDIA Corporation (NASDAQ:NVDA) as an investment, 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 NVIDIA Corporation (NASDAQ:NVDA) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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