In this article, we will take a look at the 10 best stocks for beginners with little money according to hedge funds.
Headlines from the US Stock Market
Uncertainty sweeps across the US with the incoming administration’s potential policies. Simultaneously, the Federal Reserve has decided to pause its rate-cutting cycle and the decision to resume easing is doubtful amidst Trump’s trade policies which are being deemed inflationary. Tariffs on foreign imports are considered a risk of reviving inflation. According to Reuters, Dustin Reid, chief strategist of fixed income at Mackenzie Investments in Toronto, reiterated the uncertainty looming as follows:
“Everything that is going on right now, from economic data to markets news and tariffs, adds up to a lot more uncertainty across all markets”
Recently, technology stocks benefitting from the business potential of AI witnessed a deep shock as Chinese startup DeepSeek revealed a large language model that can compete with American AI giants but at a fraction of the cost of OpenAI’s, Google’s, or Meta’s popular AI models. DeepSeek unveiled a free, open-source large language model that it claims took only two months and less than $6 to build.
The event raised a lot of concerns over America’s leadership in the AI sector and how big tech giants are investing heavily in AI models and data centers while DeepSeek somehow developed a highly competitive model without having as much compute as U.S. hyperscalers, as pointed out by Srini Pajjuri, semiconductor analyst at Raymond James. While the US has been trying to limit China’s access to the chips powering advanced AI systems, the news about DeepSeek’s chatbot making it to most-downloaded free app in the US on Apple’s App Store demonstrates the country’s rapid gains in the sector.
With that being said, let’s move to the 10 best stocks for beginners with little money according to hedge funds.
Our Methodology:
In order to compile a list of the 10 best stocks for beginners with little money according to hedge funds, we used a consensus of similar rankings as well as blue-chip ETFs. Moving on, we shortlisted the top 10 stocks from our list which had the highest number of hedge fund holders. The 10 best stocks for beginners with little money according to hedge funds have been arranged in ascending order of their hedge fund holders as of Q3.
At Insider Monkey we are obsessed with 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 Stocks for Beginners with Little Money According to Hedge Funds
10. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 112
UnitedHealth Group Incorporated (NYSE:UNH) is a health care and well-being company that strives to make health care work better through two distinct businesses, Optum and UnitedHealthcare.
With the aforementioned diversified and complimentary businesses, UnitedHealth Group Incorporated (NYSE:UNH) reinforces its strong market position in the health services industry. Value-based care is core to UNH’s mission which is proven to drive better health outcomes at a lower cost and hence, UNH serves people in value-based care in dozens of geographies. The healthcare company is laying a foundation to pave the way for more people to benefit from integrated, patient-centered care and bringing innovation to the entire healthcare system through its five strategic growth priorities including care delivery, health benefits, health technology, financial services, and pharmacy care.
The firm showed diversified growth in serving people more extensively at the Optum and UnitedHealthcare businesses as it closed 2024. 2024 revenues grew 8% year-over-year. While domestic consumers catered to by UnitedHealthcare grew 2.1 million, value-based care patients served by Optum grew 600,000. UNH is positioned well for growth in 2025, making high-quality and affordable healthcare more accessible as well as deeming the health system easier to navigate for patients and providers.
9. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 121
Netflix, Inc. (NASDAQ:NFLX) is a global streaming entertainment service with more than 300 million paid memberships in over 190 countries enjoying TV series, films, and games across various genres and languages. Netflix started its journey in 1997 as a DVD-rental-by-mail firm and began streaming in the US in 2007 and internationally in 2010 and it became global in 2016.
With streaming entertainment replacing the linear TV experience potentially for an enduring period, Netflix expects to be one of the leading firms of the streaming entertainment era. The firm has been at a scale where it can economically create original content for Netflix since 2013 thereby reaping the benefits of originals. Netflix, Inc. (NASDAQ:NFLX) has a major advantage over its linear competitors as its shows don’t compete for scarce prime-time slots like on linear TV. Furthermore, the reach is vast with Netflix being virtually everywhere except for Russia and China.
The company ended 2024 with 302 million memberships. In Q4 of 2024, operating income rose 52% year-over-year. The Q4 slate ended up outperforming expectations with Squid Game 2 being on track to becoming one of its most-watched original series seasons, the Jake Paul vs. Mike Tyson fight becoming the most-streamed sporting event ever and delivering the two most-streamed NFL games in history on Christmas Day. With a steady drumbeat of hit titles from countries globally, healthy member engagement, and a large strong core business, Netflix, Inc. (NASDAQ:NFLX) is poised for growth.
8. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Broadcom Inc. (NASDAQ:AVGO) designs, develops, and supplies a broad range of semiconductor and infrastructure software solutions. The firm’s category-leading product portfolio caters to markets such as cloud, broadband, data center, storage, industrial, networking, wireless, and enterprise software. Broadcom is headquartered in Palo Alto, California.
The global infrastructure technology leader, Broadcom, is built on over 60 years of innovation, engineering excellence, and collaboration. Many of the largest companies including most of the Fortune 500 as well as government agencies rely on the firm’s software solutions to help manage and secure their on-premises and hybrid cloud environments, AI data centers, and private cloud infrastructure. Simultaneously, Broadcom differentiates itself through its high-performance design and integration capabilities and develops semiconductor products for target markets where it can earn attractive margins.
Financials remain robust for Broadcom as its fiscal year 2024 revenue climbed 44% year-over-year to a record $51.6 billion. While Semiconductor revenue was at a record $30.1 billion supported by AI revenue of $12.2 billion, infrastructure software revenue grew to $21.5 billion as a result of the integration of VMware. Based on its technology leadership, leading semiconductor and infrastructure software solutions, and an extensive portfolio of innovative and differentiated products, Broadcom Inc. (NASDAQ:AVGO) is in an attractive spot for the future.
7. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders: 131
Mastercard Incorporated (NYSE:MA) is a global payment technology solutions company that serves consumers, small and medium businesses, government and public sector, large enterprises, as well as banks and credit unions. Mastercard’s purpose revolves around powering an inclusive digital economy that tends to benefit all.
Mastercard Incorporated (NYSE:MA) serves as a payments industry leader with differentiated solutions and a broad network reach. The company has been making payments smarter and safer for more than 50 years. The company continues to benefit from market trends underscoring its opportunities within payments and services such as accelerated digitization, demands for instant and personalized experiences, scaling of digital public infrastructure, and acceleration of AI adoption among others.
With net revenue growth of 14% year-over-year, the company closed a strong Q4 of 2024. This was driven by growth in Mastercard’s payment network and its value-added services and solutions. Payment network net revenue increased 13% and value-added services and solutions net revenue increased 16%, over the year. The management remains confident in the firm’s diverse capabilities in payments and services and solutions, positioning it well for long-term growth. Recently, Arvind Ramnani from Piper Sandler maintained a Buy rating on the stock, setting the price target of $591.
6. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL), one of the most valuable companies globally, leads the world in innovation with the iPhone, iPad, Mac, AirPods, Apple Watch, and Apple Vision Pro.
As claimed by the tech giant, its installed base of active devices has hit a new all-time high across all products and geographic segments. The firm reported its best quarter ever, its fiscal 2025 first quarter, on January 30, with revenue of $124.3 billion, up 4% over the year. While the company put forward the best-ever lineup of products and services during the holiday season, it enabled unlocking new possibilities for its users with the personal intelligence system for iPhone, iPad, and Mac, Apple Intelligence, which would be available in more languages this April.
Although Apple Inc. (NASDAQ:AAPL) ended up beating expectations on the top and bottom lines, it fell short on iPhone revenue. Simultaneously, sales out of Apple’s Greater China region were found to be lower than Wall Street anticipated in the quarter. Previously on fears of sluggish iPhone sales, the stock was downgraded by Jefferies and Loop Capital.
5. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 165
Visa Inc. (NYSE:V) is a global payments technology company that facilitates digital payments across more than 200 markets. The company’s journey started in 1958 when the Bank of America introduced the first consumer credit card program in the United States. It was in 2007 that Visa formed a global corporation and eventually went public in 2008 in one of the largest IPOs.
Visa powers the global economy by connecting 4 billion account holders to more than 130 million merchants, 14,500 financial institutions, and governments across its markets. Other than being a world leader in digital payments, the firm builds its portfolio of value-added services for its clients and partners which offer it an opportunity to diversify its revenue. The firm has accomplished making one of the most reliable and secure payment networks in the world. The firm’s scale and reach are evident from the fact that the Visa network enabled $16 trillion in total volume and 234 billion transactions in fiscal year 2024.
Recently, Visa Inc. (NYSE:V) closed a strong fiscal first quarter of 2025. The company successfully delivered 10% net revenue growth and 8% GAAP EPS growth, over the prior year. The results demonstrated improving trends in payments volume, cross-border volume, and processed transactions growth, as well as healthy spending during the holiday season.
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) specializes in products and platforms for the gaming, professional visualization, data center, and automotive markets. The chip maker is a pioneer of GPU-accelerated computing and is well known for its GPU technology. As of 2024’s third quarter, the company had 90% of the global GPU market share.
Based on the rising interest in AI and a strong demand for its AI-centric chips across various industries, NVIDIA ended up being the largest global gainer in market capitalization for 2024. Among the most valuable global stocks, the chip maker witnessed its market value increasing by more than $2 trillion last year and hitting $3.28 trillion at the close of 2024.
Although NVIDIA Corporation (NASDAQ:NVDA) is one of the major beneficiaries of the AI boom in tech stocks, the company lost nearly $600 billion in market value as the Chinese AI startup DeepSeek shook the industry, referred to as the largest market value drop in U.S. stock market history. The loss resulted in Apple retaking the position of the world’s most valuable company. Reuters reported that NVDA thinks DeepSeek’s advances point to a need for more of its chips to cater to the demand for DeepSeek’s services in the future and the usefulness of NVDA chips for the Chinese market.
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 235
Meta Platforms, Inc. (NASDAQ:META) formerly the Facebook company, builds the future of human connection and the technology that makes it possible. The firm has moved beyond 2D screens and into immersive experiences in the metaverse to help create the next evolution of social technology. It has two reportable segments, the ‘Family of Apps’ including Facebook, Instagram, Messenger, WhatsApp, and other services, and the ‘Reality Labs’ which includes its virtual, augmented, and mixed reality-related consumer hardware, software, and content.
Mark Zuckerberg embraced the metaverse by changing his company’s name from Facebook to Meta, with a focus on bringing the metaverse to life and helping people connect, find communities, and grow businesses. While the company is progressing well on AI, glasses, and the future of social media, Mark Zuckerberg remains excited to see the efforts scale further this year. He remained confident in META’s artificial intelligence strategy and dismissed concerns over the rise of DeepSeek saying that it has strengthened META’s commitment to its AI ambitions. The tech giant is to spend a total of $114-$119 billion in total expenses which includes $60 to $65 billion in AI spend this year.
Jefferies has reiterated a Buy rating on Meta Platforms, Inc. (NASDAQ:META) while raising the stock target to $810 from $715. The firm is bullish on META’s position to monetize its traction in generative AI with the META.AI platform and Llama, compelling opportunities for the company to strengthen its position in the AI market.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
The renowned technology company Microsoft Corporation (NASDAQ:MSFT) empowers people and organizations to achieve more with technology. The company has segments namely Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Microsoft sells its products through OEMs, distributors, and resellers as well as directly through digital marketplaces, online, and retail stores.
Amid the AI boom, Microsoft Corporation (NASDAQ:MSFT) serves as a leading contender among major tech giants in the AI race as a result of its partnership with the AI chatbot maker and has been investing billions to enhance its AI infrastructure. The company’s AI business is booming as reiterated by the CEO Satya Nadella on the recent FY25 Q2 earnings call:
“Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year”
The company has plans to spend about $80 billion on AI-enabled data centers in fiscal 2025. While Microsoft is trying to lower dependence on OpenAI and include internal and third-party AI models to power its flagship AI product Microsoft 365 Copilot, it recently rolled out DeepSeek’s AI model on the Azure cloud computing platform and GitHub tool for developers.
The stock has underperformed the Nasdaq and its mega-cap tech peers over the prior year. According to CNBC, the tech giant has seen the weakest gain among the eight U.S. tech megacap companies in the past year. The firm recorded a 10% quarterly profit growth for the FY25 Q2. Although the firm’s profits and revenue beat Wall Street expectations, Microsoft’s intelligent cloud segment’s revenue grew by 19% from last year to $25.5 billion which was lower than the consensus estimate.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com, Inc. (NASDAQ:AMZN) is a leading e-commerce company that has grown in a variety of businesses such as its core e-commerce operations, cloud services, as well as digital advertising. Additionally, Amazon manufactures and sells electronic devices such as Kindle, Ring, Blink, Fire tablet, Fire TV, and Echo.
Amazon.com, Inc. (NASDAQ:AMZN) serves as a global leader in e-commerce, cloud computing, and digital streaming. The company posted better-than-expected earnings and revenue for its most recent quarter, with Amazon’s cloud and advertising units showing strong growth. Ahead of the new earnings for Q4 2024 which are to be released on February 6, several Wall Street firms agree the e-commerce and cloud giant boasts the strongest setup among the mega-cap tech companies going into the earnings season, as reported by CNBC.
Jefferies analyst Brent Thill maintained a Buy rating on the stock and set a price target of $275. On January 24, Amazon.com, Inc. (NASDAQ:AMZN) also got a Buy rating from Scotiabank’s Nat Schindler. Lisa Schreiber from Gradient Investments emphasized Amazon.com Inc (NASDAQ:AMZN) being one of her top picks for 2025 as follows:
“It’s the leader in online retail and is very well-diversified with its cloud-based business, where it’s also a leader. Additionally, its ad business is gaining momentum and doing very well. Together with the fact that the path to AI monetization seems clearer for Amazon.com Inc (NASDAQ:AMZN) compared to other big names, we just have to recall their latest commentary around their cloud business, where they plan to introduce their own AI chip, which could potentially rival Nvidia down the road. The introduction of their AI agents is also increasing efficiency in their online retail. I think all of that presents great opportunities for 2025.”
While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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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