10 Best Technology Stocks to Buy According to Giant Quant Hedge Fund

Published on November 13, 2023 at 2:51 pm by Ruchi Gupta in Hedge Funds, News

In this piece, we will take a look at 10 best technology stocks to buy according to giant quant hedge fund. For more stocks, head on over to 5 Best Technology Stocks to Buy According to Giant Quant Hedge Fund.

Computer and technology stocks have cooled off in recent months as investors remain wary about the economy and rising interest rates. Tech-heavy Nasdaq 100 has already given back 7% from its peak recorded at the height of a bull run. The steep pullback came against growing concerns about valuations and concerns that the US Federal Reserve will continue on its aggressive monetary policy tightening.

Fast forward, calm is slowly creeping into the market, with tech stocks showing signs of bouncing back after a dismal past three months. The Federal Reserve keeping interest rates unchanged for a second consecutive time at its November meeting is leading investors to believe they will stay put for the rest of the year.

The FED going slow on interest rate hikes is one factor that has supported information technology stocks gaining 2% over the past month. Semiconductor stocks led by Advanced Micro Devices, Inc. (NASDAQ:AMD), Micron Technology, Inc. (NASDAQ:MU), and NVIDIA Corporation (NASDAQ:NVDA) have also bounced back on the FED, keeping interest rates unchanged from 5.25% to 5.5%. Nevertheless, uncertainty still hangs in the balance amid soaring geopolitical tensions and monetary policy tightening.

Geopolitical tensions in the Middle East amid the Israel-Hamas war continue to send jitters in the market, consequently fuelling demand for safe havens at the expense of equities. FED chair Jerome Powell not ruling out a hike next month is another headwind that could affect technology stocks’ performance heading into year-end.

The uncertainty on how to trade tech stocks heading into year-end heightens the prospects of turning to mathematical and statistical methods to try and predict the market outlook. Renaissance Technologies is one hedge fund that remains in the spotlight on leveraging mathematical and statistical methods to analyse data and try to unlock hidden opportunities in the market.

Founded in 1982 by legendary investors Jim Simons and Howard Morgan, the $130 billion hedge fund is one of the most followed owing to its impressive track record. It has affirmed its status as one of the largest and most successful quant hedge funds using quantitative and algorithmic trading methods to explore corrections and patterns.

Renaissance Technologies had a portfolio value of about $69 billion as of the end of the second quarter, with tech stocks accounting for the most significant share of the portfolio. The quant-focused hedge fund also employs a diversification that also sees it invest in services, utilities, healthcare and financials in addition to technology stocks.

Medallion fund managed by Renaissance Technologies is one of the most successful funds owing to its impressive returns over the years. The fund has generated an annualized average return of 66% since being established in 1988, affirming why it is one of the most followed for anyone looking for the best technology stocks to buy, according to a giant quant hedge fund.

A woman analyzing a large dataset on a computer screen, emphasizing the importance of analytics in the technology sector.

The impressive performance in the market stems from portfolio managers at Medallion Fund relying on complex mathematical formulas and crucial metrics to try and predict the direction in which the market is likely to move.

While Simons did step down from active management of the hedge fund in 2010, Chief Executive Officer Peter Brown has stuck to the winning strategy of relying on complex algorithms to analyse the markets and unlock value.

Early in the year, Brown and his team focused on the US financial sector, under pressure amid the banking crisis that had triggered significant volatility. Renaissance sought to take advantage of depressed valuations in the sector. Fast forward, the hedge fund has set sights on the technology sector benefiting from the artificial intelligence boom.

Our Methodology

Some of the best technology stocks to buy, according to the giant quant hedge fund, are market leaders in their respective sectors. Likewise, they boast of solid fundamentals and are likely to benefit from the FED going slow on interest rate hikes and economic conditions improving. After analysing Renaissance Technologies 13F filling for the second quarter of 2023, we have settled on the best technology stocks that investors should pay attention to heading into year-end. The stocks are ranked chronologically based on Renaissance Technologies stakes in them. We have also analysed the 910 hedge funds in the Insider Monkey database to find out their sentiment for each stock.

Best Technology Stocks to Buy According to Giant Quant Hedge Fund

10. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)

Number of Hedge Fund Holders: 65

Renaissance Technologies Equity Stake: $420.24 Million

Based in Austin, Texas, CrowdStrike Holdings, Inc. (NASDAQ:CRWD) offers cloud-delivered protection across various cloud workloads, identity and data. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is experiencing double-digit growth in its annual recurring revenue, signalling strong demand for its solutions.

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is up by more than 70% for the year, dwarfing the 10% gain for the S&P 500 and 34% for the Nasdaq 100. It is also up by over 300% since Renaissance Technologies started investing in it. Th quant hedge fund held stakes worth $420 million in the company as of the end of Q2.

CrowdStrike Holdings, Inc. (NASDAQ:CRWD) had the support of 65 hedge funds in Q2 2023, out of 910 hedge funds surveyed by Insider Monkey. The firm’s prominent investor was Zevenbergen Capital Investments, a hedge fund led by Nancy Zevenbergen, which owned 285,025 shares valued at $47.71 million.

In its Q3 2023 investor letter, Carillon Eagle Mid Cap Growth Fund made the following comment about CrowdStrike Holdings, Inc. (NASDAQ:CRWD):

“CrowdStrike Holdings, Inc. (NASDAQ:CRWD), a provider of cyber security software solutions, delivered positive quarterly results and forward guidance above expectations. Large deal momentum was driven by cloud security, identity protection, and security software management. Other positive developments include an improved profitability profile and ramping reseller partnerships.”

9. Uber Technologies, Inc. (NYSE:UBER)

Number of Hedge Fund Holders: 144

Renaissance Technologies Equity Stake: $448.58 Million

Uber Technologies, Inc. (NYSE:UBER) is a company that offers carsharing, ridesharing, delivery, and freight services through its apps. Its stock has risen by over 70% this year, as its technology has become more popular.

The stock is up by about 50% since Renaissance Technologies started investing in it at the height of the pandemic, affirming why it is one of the best technology stocks to buy, according to the giant quant hedge fund. As of the end of Q2 2023, the hedge fund held stakes worth $48.58 million accounting for 0.64% of the portfolio.

Uber Technologies, Inc. (NYSE:UBER) was a popular choice among 144 hedge funds in Q2 2023, out of 910 hedge funds tracked by Insider Monkey. In Q3 2023, The firm’s notable investor was Zevenbergen Capital Investments, a hedge fund run by Nancy Zevenbergen, which held a large stake of $133.12 million in the company.

In its Q3 2023 investor letter, Aristotle’s Large Cap Growth Strategy provided the following insight regarding Uber Technologies, Inc. (NYSE:UBER):

“Uber Technologies, Inc. (NYSE:UBER) develops and operates proprietary technology applications. The company operates through three segments: Mobility, Delivery and Freight. The Company develops and operates proprietary technology applications supporting a variety of offerings on its platform.

We see the company as the global leader in ride-hailing and one of the few delivery app companies with a strong network effect for both businesses. Uber is experiencing strong revenue growth as adoption and frequency of usage continue to grow in both segments. We expect the company will also benefit from more demand due to the higher frequency of workers attending work in the office, rather than working from their homes. We look for revenue growth as the adoption of Uber’s services increases and the company expands globally.”

8. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 79

Renaissance Technologies Equity Stake: $547.57 Million

Tesla, Inc. (NASDAQ:TSLA) designs, develops, manufactures, and sells electric vehicles and energy generation and storage systems. Its automotive segment offers electric and self-driving cars, including sedans and sport utility vehicles.

Tesla, Inc. (NASDAQ:TSLA) is one of the companies that has benefited amid the electric vehicle revolution in the auto sector as the pioneer. Consequently, the stock is up by about 89% for the year, outperforming the S&P 500. The value of the quant hedge fund stakes in the EV Company as of Q2 stood at $547.57 million.

Tesla, Inc. (NASDAQ:TSLA) had the support of 79 hedge funds in Q2 2023, which was about 8.68% of the 910 hedge funds surveyed by Insider Monkey.

Here is what Baron Partners Fund wrote about Tesla, Inc. (NASDAQ:TSLA) in its Q2 2023 investor letter:

“Many factors contributed to the strong performance of our largest Disruptive Growth position, Tesla, Inc. (NASDAQ:TSLA), in the period. Investors’ concerns regarding Tesla in 2022 continue to dissipate, and the company’s business has continued to grow materially, although at below peak margins. Tesla’s deliveries in China are recovering. The company’s newest factory in Texas has ramped production and should contribute to improved domestic sales and margins. U.S. government policies have lowered the cost to own Tesla vehicles, while also reducing the company’s battery production expenses.

We continue to believe that Tesla is only scratching the surface of its potential. We regard announced partnerships between Tesla and its competitors in the quarter as important. In early June, Tesla agreed to provide Ford Motors access to Tesla’s electric vehicle (EV) charging technology and network. Other traditional and pure EV manufacturers, including General Motors, Rivian, and Volvo, quickly followed suit. We expect additional charging partnerships to ensue. In our view, these relationships validate Tesla’s charging technology and infrastructure as superior to other standards. Consolidation around a single technology should accelerate charging infrastructure deployment, diminish the risk of Tesla’s technology becoming obsolete, and lessen a key concern of hesitant EV purchasers. EV adoption is at a tipping point. And Tesla, with its approximately 60% domestic market share of EVs, should be the most important beneficiary of this shift…”

7. Fortinet, Inc. (NASDAQ:FTNT)

Number of Hedge Fund Holders: 49

Renaissance Technologies Equity Stake: $552.26 Million

Fortinet, Inc. (NASDAQ:FTNT) operates in the software infrastructure segment, offering cybersecurity and network solutions worldwide. The stock has outperformed the S&P 500, going by 18% year-to-date gain, benefiting from strong demand for cybersecurity solutions amid the digital revolution.

Fortinet, Inc. (NASDAQ:FTNT) is one of oldest holdings since 2011, a period in which it has gained over 1300%. Renaissance Technologies held stakes worth $552.26 million as of the second quarter in the company.

Out of 910 hedge funds monitored by Insider Monkey, 49 were invested in Fortinet, Inc. (NASDAQ:FTNT) in Q2 2023. The firm’s notable investor in Q3 2023 was Zevenbergen Capital Investments, a hedge fund run by Nancy Zevenbergen, which held a stake of 250,000 shares worth $14.67 million.

6. Palantir Technologies Inc. (NASDAQ:PLTR)

Number of Hedge Fund Holders: 39

Renaissance Technologies Equity Stake: $610.12 Million

Based in Denver, Colorado, Palantir Technologies Inc. (NASDAQ:PLTR) builds and deploys software platforms for the intelligence community. Its solutions assist in counterterrorism investigations and operations as they enable users to identify patterns hidden deep within datasets. In the aftermath of soaring geopolitical tensions, its solutions are in high demand, helping strengthen the company’s sentiments.

Up by more than 130% for the year, Palantir Technologies Inc. (NASDAQ:PLTR) stands out as one of the best technology stocks to buy according to the giant quant hedge fund, as it has outperformed tech-heavy Nasdaq, up by about 34% year to date. Renaissance Technologies stakes in the company as of Q2 stood at $610.12 million.

Insider Monkey took a look at 910 hedge funds for their June quarter of 2023 shareholdings and discovered that 39 were the firm’s investors. Palantir Technologies Inc. (NASDAQ:PLTR)’s significant hedge fund investor in our database is Catherine D. Wood’s ARK Investment Management since it owns 9.42 million shares that are worth $150.78 million.

Click to continue reading and see 5 Best Technology Stocks to Buy According to Giant Quant Hedge Fund.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on October 30, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on November 16, 2024 at by Insider Monkey Staff

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

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Click to continue reading…

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