In this article, we will look at the 10 High Growth NASDAQ Stocks That Are Profitable in 2024.
Will the Bull Market Continue as We Enter the Earnings Season?
Malcolm Ethridge, Capital Area Planning Group managing partner, joined CNBC to talk about where the market could go and his sentiment regarding the AI and overall tech sector. While many analysts believe that it will be the small caps that will lead the growth with interest rates easing and the economy slowing down. We recently covered the 8 Most Undervalued Penny Stocks To Buy According To Analysts, where we talked about how Tom Lee, co-founder of Fundstrat Global Advisors likes the small cap in the current market environment. Here’s a piece from the article:
“To talk about what the stock market looks like today and in the near future. Tom Lee, co-founder of Fundstrat Global Advisors joined CNBC in a recent interview. He has been one of the strong proponents and supporters of small-cap stocks. Lee says that we are in a volatile environment currently, due to a few reasons, one being the elections in less than 30 days, the second being the Middle Eastern crisis which is scaring investors, and lastly the port strike that has the potential to cripple the economy. However, he still expressed his optimism that the year-end has a lot of tailwinds and investors shouldn’t be afraid to buy the dip. Moreover, Lee also highlighted that these current events are all short-term headwinds in a buying cycle and are expected to die down quickly.
Lee thinks that bottoms are tough and processed, and small caps are in the process of what could be a multi-year bottom. Therefore the conviction is that some people might want to buy the big names on NASDAQ and the AI market, however, with small caps trading at lower multiples of P/E less than 10, the risk and reward lie in small caps. Lee further mentioned that interest rate cuts and better earnings growth make the path for small-cap growth more visible.
Tom Lee has also reaffirmed his belief that the S&P 500 could close above 5,700 by year-end, supported by strong economic fundamentals and a dovish Federal Reserve beginning to cut interest rates. He noted that significant cash reserves are available for investment, which could drive stock prices higher in the next three to twelve months.”
Ethridge thinks otherwise, he believes that mega-cap stocks will continue to lead market growth, although not at the same pace as in recent years but still at a steady pace. He attributes this to the ongoing influence of artificial intelligence (AI) on various sectors, including real estate and manufacturing, which are becoming increasingly vital due to rising demands on infrastructure.
Moreover, while explaining why the mega caps will lead the growth, Ethridge pointed out that for the big tech stocks, Fed rate cuts were not necessary as they had significant cash on their balance sheets to reinvest into newer AI ventures. We have already seen Magnificent Seven invest heavily in AI despite the high rate of borrowing thereby leading the bull market in difficult times.
The rate cuts have now made it easy for other companies that didn’t have enough cash to borrow and invest in technology. However, he also pointed out that the pace of rate cuts might slow down moving forward, thereby making it hard for small caps to keep up the technology investment race. Ethridge suggests that investors may need to adjust their expectations regarding future Federal Reserve rate cuts.
Moreover, we are also entering earnings season, will the earnings derail the momentum or continue to boost the market? Drew Pettit, Citi Research Director of US Equity Strategy joined CNBC in another interview. He thinks that we are in for a decent quarter, although we are in an expensive market.
While talking about how various sectors will perform, Pettit mentioned that software has the highest bar within tech, meaning its growth expectations are high, yet many software companies are not monetizing effectively. This creates volatility in stock performance. As earnings reports come in, Pettit suggests investors should focus on consumer behavior and credit conditions, particularly in the banking sector, which is expected to perform well this quarter. He also encouraged investors to look beyond the recent quarter earnings into 2025 and 2026, while choosing companies to invest in.
Let’s now talk about the 10 high-growth NASDAQ stocks that are profitable in 2024.
A close-up of a person’s hand holding a printed chart featuring stocks and curves.
Our Methodology
To curate the list of 10 high-growth NASDAQ stocks that are profitable in 2024 we used the Finviz stock screener, Seeking Alpha, and Yahoo Finance as our sources. Using the stock screener, we got an initial list of major NASDAQ stocks sorted by their market capitalization. Next, we sourced the 5-year net income growth and revenue growth rates for these stocks from Seeking Alpha and the GAAP trailing twelve-month net income from Yahoo Finance. We only selected stocks that had 5-year net income and revenue growth of more than 15%. Lastly, we ranked the stocks by the number of hedge fund holders in Q2 2024 from Insider Monkey’s database. The list is ranked in ascending order of the number of hedge fund holders.
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 High Growth NASDAQ Stocks That Are Profitable in 2024
10. AstraZeneca PLC (NASDAQ:AZN)
5-Year Net Income Growth: 24.10%
5-Year Revenue Growth: 16.32%
TTM Net Income: $6.44 Billion
Number of Hedge Fund Holders: 49
AstraZeneca PLC (NASDAQ:AZN), an international biopharmaceutical company based in the UK. The company develops, sells, and markets prescription medicines that are used in the treatment of oncology, respiratory, cardiovascular, and other rare diseases. Many factors are pointing towards lofty growth projections for the company.
AstraZeneca PLC (NASDAQ:AZN) has a robust portfolio of medicines that are used as the first point of treatment for many diseases. This has led the company’s revenue to grow by 18% year-over-year to $25.62 billion during the first half of 2024. Moreover, the core operating profit also jacked up by 7% during the same time indicating profitable operations for the company.
What’s more impressive about the company is its pipeline of over 200 projects with the main focus on oncology, respiratory, and rare diseases. It has already received FDA approval for Voydeya, which is used to treat hemolysis in adults with paroxysmal nocturnal hemoglobinuria.
Based on the strong pipeline and impressive performance of the existing portfolio, management believes that its top line will reach $80 billion by the end of this decade, which will represent almost a 75% increase from the current levels. It has already grown its top line by 16% and bottom line by 24% during the past 5 years, making it one of the high growth NASDAQ stock that are profitable in 2024.
Parnassus Growth Equity Fund stated the following regarding AstraZeneca PLC (NASDAQ:AZN) in its Q2 2024 investor letter:
“AstraZeneca PLC (NASDAQ:AZN) gained after announcing robust first-quarter results and setting 2030 targets at an Investor Day that were above consensus expectations. We continue to believe that AstraZeneca’s robust pipeline and industry-leading innovation in oncology should support above-expectation revenue growth for the next several years.”
9. KLA Corporation (NASDAQ:KLAC)
5-Year Net Income Growth: 18.63%
5-Year Revenue Growth: 16.52%
TTM Net Income: $2.76 Billion
Number of Hedge Fund Holders: 55
It is rare to find a stock that operates in the high-growth artificial intelligence sector and pays good dividends. Even if an AI stock pays a small dividend it won’t remain small in 5 to 10 years considering the lofty growth trajectories.
Let us introduce KLA Corporation (NASDAQ:KLAC), a key player in the semiconductor industry that focuses on process control and yield management. Simply speaking, the company provides tools and services that help manufacturers of semiconductors ensure their chips are correct and efficient.
During the first week of September, KLA Corporation (NASDAQ:KLAC) announced a rise in its quarterly payout to shareholders by 17% to reach $1.70 per share, which makes the annual dividend $6.80. This increase marked the 15th consecutive year of annual dividend increase making it an attractive investment for growth investors who like dividend-paying stocks.
When it comes to the business operations and strategic edge of the company it stands out in the semiconductor industry. This is primarily because of the indispensable importance of KLA Corporation (NASDAQ:KLAC) technology, which is becoming more and more important with chips becoming smaller. The technology of the company allows large chip makers to find defects at various production points ensuring a smooth manufacturing lineup. The company currently dominates around 50% of its market niche.
If we look at the fiscal fourth quarter of 2024, the company does not seem to disappoint at all. It grew its revenue by 9% subsequently and year-over-year to reach $2.57 billion. Its gross margins were recorded at 62.5% with net income at $893 million.
The prospects of KLA Corporation (NASDAQ:KLAC) look as impressive as any other company operating in the AI industry, thereby making it one of the high-growth NASDAQ stocks that are profitable in 2024.
Parnassus Mid Cap Fund stated the following regarding KLA Corporation (NASDAQ:KLAC) in its Q2 2024 investor letter:
“KLA Corporation (NASDAQ:KLAC), a provider of process control and yield management solutions for the semiconductor and related nanoelectronics industries, continued its strong run. We expect KLA will continue to benefit from the increasing complexity of chip designs.”
8. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)
5-Year Net Income Growth: 15.87%
5-Year Revenue Growth: 15.57%
TTM Net Income: $4.32 Billion
Number of Hedge Fund Holders: 57
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) is another biotechnology company that ranks 8th on our list of high-growth NASDAQ stocks that are profitable in 2024. It engages in the development of new drug treatments aimed at treating various diseases, including cancer, eye diseases, and allergic conditions.
Medicines including EYLEA, Dupixent, Librato, and Praluent are some leading first treatment medicines for the company driving considerable revenue. Moreover, the drug development methods employed by Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) set it apart from its competitors. It uses AI to speed up the process of drug discovery and development. Its Regeneron Genetics Center is an AI-driven genetic research center that has one of the world’s largest genetic research databases which is used in developing new treatments.
Despite these strategic edges, Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) recently came under some competitive pressure when one of its competitors developed a biosimilar medicine to EYLEA, which treats an eye disease called wet age-related macular degeneration (AMD). The company has filed a lawsuit against the FDA approval for this biosimilar medicine but the trial is yet to begin. This has scared away some investors.
However, here’s what you might not know about Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN). EYLEA still has an edge over this competitor as the high-dose version of the medicine allows patients to treat the disease in less doses thereby becoming one of the key selling points for the company. Moreover, in the second quarter sales of EYLEA and EYLEA HD came in with a 2% increase year-over-year to $1.53 billion. The overall revenue of the company was $3.55 billion, up 12% during the same time.
Another point of relief for investors is that EYLEA is not the main growth driver for the company. Eczema treatment Dupixent is one of the key drivers of growth for the company and its sales grew 27% year over year to $3.56 billion indicating that even if the lawsuits goes south the growth engines will continue firing. Moreover, the company has some 50 programs in the pipeline which advocate for continued growth of the company.
Bronte Capital Amalthea Fund made the following comment about Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) in its Q3 2023 investor letter:
“In the last quarterly letter, we discussed the problems in our long book. These were:
a) companies that sell technical products to improve the conversion of grain into meat (such as animal genetics and feed additives), and
b) Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN), which had received a “Complete Response Letter” (an FDA rejection) for their new longer-lasting wet age-related macular degeneration drug.
The first of these problems has persisted. Grain prices remain high relative to meat prices and the stocks in question have followed their quality European peers down. The two losers in this sector are Genus and DSM-Firmenich…” (Click here to read the full text)
7. ASML Holding N.V. (NASDAQ:ASML)
5-Year Net Income Growth: 24.01%
5-Year Revenue Growth: 18.88%
TTM Net Income: $6.74 Billion
Number of Hedge Fund Holders: 81
ASML Holding N.V. (NASDAQ:ASML) is a leading company in the semiconductor industry, primarily known for producing advanced equipment used to manufacture microchips. It designs and manufactures machines called lithography systems, which are crucial for creating the tiny patterns on silicon wafers that form microchips. These machines are essential for any chipmaker thereby giving the company an indispensable position in the AI market.
It operates internationally with operations in The Netherlands, the United States, South Korea, Taiwan, and Japan. ASML Holding N.V. (NASDAQ:ASML) is about to have a stock split, however, a stock split isn’t necessarily a catalyst for growth but a sign of management’s confidence that the shares will continue to grow.
What’s more important are the strong fundamentals of the company which ASML Holding N.V. (NASDAQ:ASML) demonstrates through its market-leading position. It is the only supplier of extreme ultraviolet lithography (EUV) machinery, which is essential for printing advanced chips. It also generates significant revenue from servicing already installed devices. The company has grown its servicing revenue faster than new system installations.
These machines installed by the company have a lifespan of 25 to 30 years thereby ensuring long-term and steady growth for the years to come. The current year for ASML Holding N.V. (NASDAQ:ASML) is a transition year where the company does not expect any revenue growth as it is gearing up for a record next year. Management is expecting revenue to be between 30 billion and 40 billion euros ($33.17 billion to $44.2 billion) in 2025. Stated that the company has grown its top line by around 19% and bottom line by around 24% during the past 5 years, the projections do not sound far-fetched.
Baird Chautauqua International and Global Growth Fund stated the following regarding ASML Holding N.V. (NASDAQ:ASML) in its Q3 2024 investor letter:
“ASML Holding N.V. (NASDAQ:ASML): After a 35% price appreciation in 1H24 and a beat in 2Q24 numbers, investors are apprehensive about Intel capex cuts, potential memory weakness, and a less clear cyclical recovery pace in 3Q24 and potentially 2025. We remain positive on long-term demand for ASML’s products due to industry supply/demand factors for computing power.”
6. Netflix, Inc. (NASDAQ:NFLX)
5-Year Net Income Growth: 43.86%
5-Year Revenue Growth: 15.54%
TTM Net Income: $7.09 Billion
Number of Hedge Fund Holders: 103
Netflix, Inc. (NASDAQ:NFLX) is an entertainment streaming company that provides TV shows, documentaries, movies, and games through its platform.
The company has been one of the best growth stocks during the past 5 years with the topline growing by 16% and the bottom line growing by 44%. It remains on the growth trajectory with plans to integrate AI and Ads into its platform. It plans to inject more than $17 billion into content to improve its global audience and drive sustainable revenue and profit growth.
Netflix, Inc. (NASDAQ:NFLX) is also on track to achieve critical goals in 2025 to initiate ad revenue from its platform. It reported 17% revenue growth and 5% growth in margins during the second quarter of 2024 indicating that it is already doing well even before the ads revenue.
Analysts are expecting the revenue and profit margins of the company to jack up considerably based on its AI integration and Ads incorporation. Thereby making it one of the high-growth NASDAQ stocks that are profitable in 2024.
Polen Focus Growth Strategy stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its Q2 2024 investor letter:
“Finally, we trimmed Netflix, Inc. (NASDAQ:NFLX) mostly due to valuation but also as a source of funds to add to the new position in Shopify. As a reminder, we added to our position in August 2022 amid broad concerns about the company’s ability to grow and monetize shared passwords. We expected Netflix to show progress in monetizing shared passwords, leading to robust free cash flow generation. This is now playing out and is appreciated by the market. Hence, given the balance of growth and valuation, we felt it was appropriate to reduce our exposure to a more normal weight.”
5. Advanced Micro Devices, Inc. (NASDAQ:AMD)
5-Year Net Income Growth: 47.95%
5-Year Revenue Growth: 31.70%
TTM Net Income: $1.35 Billion
Number of Hedge Fund Holders: 108
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global technology company specializing in semiconductor products and is competing with Wall Street’s favorite chip maker by making cheaper and power-efficient semiconductor chips.
The company initially faced a series of challenges from Intel and Nvidia for its GPU business. However the company revived its business with three core strategies.
Firstly, it expanded the business into enterprise, embedded, and semi-custom (EESC) chipmaking with custom APUs. These became a key component for PlayStation and Xbox consoles. Secondly, management refreshed its CPU business with Ryzen and Epyc servers. It also shifted its foundry to Taiwan Semiconductor Manufacturing, which is one of the advanced chipmakers internationally. These steps made Advanced Micro Devices, Inc. (NASDAQ:AMD) chips more powerful and smaller enabling it to capitalize on its competitors.
During the second quarter of 2024, the company grew its revenue by 9% to $5.8 billion, mainly on the back of strong growth in the Data Center and Client segments. Moreover, its GAAP margins also improved 3% during the same time to reach 49% during the most recent quarter.
Management expects the AI accelerators market will surpass $400 billion by 2025 and analysts are expecting that the company will double its revenue in 2025 to reach at least $10 billion in 2025. Having grown its revenue by 31.70% during the past 5 years, the $10 billion mark doesn’t sound like an unachievable target for Advanced Micro Devices, Inc. (NASDAQ:AMD). It is the 5th high-growth NASDAQ stock that will be profitable in 2024.
Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2024 investor letter:
“Shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) lagged the market after the company reported earnings results that, while generally strong, left the market wanting more. The company reported AI revenue of ~$600 million and increased its forward-looking outlook for AI revenue growth, but shares took a breather, as results missed elevated expectations after the stock’s strong performance. Despite the stock’s underperformance during the quarter, the company’s AI story remains very much intact. The growth outlook for the company is supported by better cloud demand, enterprise recovery and continued share gains ahead of the company’s new AI product launch.”
4. NVIDIA Corporation (NASDAQ:NVDA)
5-Year Net Income Growth: 80.81%
5-Year Revenue Growth: 56.73%
TTM Net Income: $53.01 Billion
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) is a leading technology company which a huge market capitalization of $3.307 trillion as of this writing. It engages in some of the most high growth industries within the greater technology sector namely, Data Centers, Automotive Solutions, Networking, and Gaming. They provide Gaming Processing Units (GPUs) and semiconductor chips for computing infrastructure, which have become the powerhouse for Data Centers and AI revolution.
The company tripled its market capitalization from 2019 to 2022, a time when most of its revenue came from GPUs business and Data Centers accounted for merely 30% of the revenue. However, things have changed, the second quarter of fiscal 2025 revealed Data Center segment now accounts for more than 87% of the revenue. And what’s more impressive is the fact that this segment is reaching record highs. During the most recent quarter Data Center revenue was up 154% year-over-year to reach $26.3 billion, mainly on the back of NVIDIA Corporation’s (NASDAQ:NVDA) Hopper GPUs.
The company also announced that its Blackwell platform GPUs production is scheduled to begin in Q4 and that management expects several billions in revenue from Blackwell in Q4. Recently in its October investor presentation the company announced that the Blackwell platform is already in full production phase, indicating that the revenue boost for the company might come sooner than expected. As per the management Blackwell utilizes 4 times less power when compared to Hopper GPUs, which is likely to cater the high power consumption issue associated with the Data Centers.
While the Data Center segment hit record high, the Gaming segment revenue also improved 16% year-over-year to $2.9 billion. Strong performance by these two segments resulted in the net income for NVIDIA Corporation (NASDAQ:NVDA) going up by more than 168% during the same time making it one of the high growth NASDAQ stocks that are profitable in 2024.
Vltava Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2024 investor letter:
“Over the summer, we devoted a lot of time to studying the AI-related investment wave. This spans a wide range of sectors and our view could be very briefly summarised as follows: The first-tier beneficiaries are primarily companies in the semiconductor sector, NVIDIA Corporation (NASDAQ:NVDA) perhaps the most. That company is benefiting from the huge increase in investment by large technology companies to build enormous data centres. We know who NVIDIA’s customers are. They are companies like Meta, Alphabet, Amazon, and Microsoft. They are investing hundreds of billions of dollars into their AI capabilities. What is not entirely clear, however, is who are and will be the customers of NVIDIA’s customers, and, more importantly, when, and if, they will be able to come up with such huge demand for AI services that the profits from AI will justify and pay for the enormous investments all these companies have been making. The further we move away from the starting point that NVIDIA represents in our more broadly-reaching estimates, the lessreliable those estimates are.So far, we know just one thing for sure, and that is that investments in AI capabilities are ongoing and they are huge. They are not only bringing large demand to chipmakers and the semiconductor sector but to some other sectors as well. Indeed, building AI clusters also requires the construction of new semiconductor factories, new energy sources, and all the associated infrastructure. The numbers under consideration are incredibly high. It is possible that over the next decade the construction of AI centres will necessitate a 20% increase in US energy consumption. The investment required will be measured not in the hundreds of billions of dollars, but in an order of magnitude higher. Maybe two orders of magnitude.”
3. Alphabet Inc. (NASDAQ:GOOGL)
5-Year Net Income Growth: 20.33%
5-Year Revenue Growth: 17.23%
TTM Net Income: $87.66 Billion
Number of Hedge Fund Holders: 216
Alphabet Inc. (NASDAQ:GOOGL) ranks 3rd on our list of high-growth NASDAQ stocks that are profitable in 2024. It is one of the Magnificent Seven technology companies known for its subsidiary Google.
The company has significant development in artificial intelligence, Google Cloud, and is known for its other products as well including YouTube, Gmail, and Android Operating systems among others. Investors are on the lookout for its autonomous driving venture, Waymo.
While Tesla gets the majority coverage when it comes to self-driving car ambition, however, Alphabet Inc. (NASDAQ:GOOGL) with its Waymo venture has quietly made significant progress. Last week the company announced a significant robotaxi deal with Hyundai, a South Korean automaker. With this multi-year strategic partnership, Hyundai will use the autonomous driving technology of Waymo in 5 of its SUVs for the next 5 years.
Alphabet Inc. (NASDAQ:GOOGL) plans to launch its robotaxis for test drives by the end of 2025 and is expected to deploy a large fleet on public roads in the following years. It won’t be wrong to say that Alphabet Inc. (NASDAQ:GOOGL) is leading the robotaxi race as a fleet of around 700 self-driving cars are already operating in major states of the United States including Phoenix, Los Angeles, and San Francisco. The company is testing its services in Texas as well.
If we talk about Alphabet Inc. (NASDAQ:GOOGL) as a whole, the company has been generating significant revenues on the back of its search and cloud segments. The revenue for the second quarter of 2024 was up 14% year-over-year to reach $85 billion. Moreover, the company has generated more than $87 Billion in net income on a trailing twelve-month basis.
Patient Capital Opportunity Equity Strategy stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q2 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOGL) was a top contributor in the second quarter, finally catching up to its peers in the Magnificent 7. The company gained 20.8% in the period following strong first quarter earnings, a new $70B repurchase program (3% of shares outstanding) and the initiation of a cash dividend ($0.20 per share; 0.42% yield). We continue to believe the market underappreciates Google’s exposure to AI with its Gemini model being integrated into search results, YouTube advertising and its cloud offering. We continue to think that the cloud players will be the AI winners in the long-term, with Google being well positioned to take advantage. While the company trades at 24x 2024 earnings, if you remove the money-losing and under-earning businesses, you realize that you are paying below a market multiple for the core Google business. We do not believe there are many other AI winners trading at such an attractive multiple.”
2. Meta Platforms, Inc. (NASDAQ:META)
5-Year Net Income Growth: 24.69%
5-Year Revenue Growth: 19.06%
TTM Net Income: $51.43 Billion
Number of Hedge Fund Holders: 219
Meta Platforms, Inc. (NASDAQ:META) is another high-growth NASDAQ stock that is profitable in 2024. It is the creator and manager of famous social media platforms, Facebook, Instagram, and WhatsApp, and runs everything related to the social media that we have today.
The strategic edge of the company comes from its huge user base, which makes it impossible for any competitor to challenge its growth. While any tech company can create a social media platform, what they can’t do is drive active users like Meta Platforms, Inc. (NASDAQ:META) does. During the fiscal second quarter of 2024, the company reported more than 3.3 billion active daily users on its social media apps including Facebook, WhatsApp, and others.
Another quality that the company has developed over time is its high rate of Return on Invested Capital (ROIC). We recently saw investor confidence shattering due to a lack of return on AI investment by tech giants. But not with Meta Platforms, Inc. (NASDAQ:META), the company currently has a ROIC of 31%, which is more than 3 times the average of the S&P 500.
If we look at the past 5 years performance we see that the company has grown its bottom line by 25% and top line by 19%. During the second quarter of 2024, it brought in $10.9 billion in free cash flow indicating strong and profitable fundamentals.
Rowan Street Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q2 2024 investor letter:
“We are pleased to report that Meta Platforms, Inc. (NASDAQ:META), our largest position in the fund, has delivered a remarkable performance, +450% since our November 2022 note. Our investment in Meta dates back to 2018, with an average cost basis of approximately $172 per share. Today, the stock trades around $535, reflecting a 3x return over the six-year holding period, equating to a 20% annualized return.
We would like to remind you that achieving these types of returns is never a straight path. From time to time, we might experience volatility — that’s simply part of the investment journey. In fact, wealth creation and volatility go hand in hand. There’s no escaping it; it’s the “price of admission” the market demands. If you take a look at the chart below, you’ll notice the drawdowns META stock has faced over the years, with 2022 standing out as a particularly challenging period, where the stock saw a 75% drop…” (Click here to read the full text)
1. Amazon.com, Inc. (NASDAQ:AMZN)
5-Year Net Income Growth: 29.71%
5-Year Revenue Growth: 19.11%
TTM Net Income: $44.42 Billion
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) is an international technology company known for its online retail services. Its retail services include online shopping platforms and physical stores. The company also engages in cloud computing services through its Amazon Web Services (AWS), which is one of the major parts of its business.
The company has taken strategic measures to adopt artificial intelligence across its business offerings. Amazon.com, Inc. (NASDAQ:AMZN) had to face some challenges due to an all-time high inflation rate, however, the recent interest rate cuts and changing consumer sentiment have helped the company a lot. During the second quarter of 2024, it improved its net sales by 10% year-over-year to reach $148 billion and as a result, its earnings per share nearly doubled to $1.26.
The company’s cloud business has also done well due to the recent AI integration and jumped 19% year-over-year. The strategic edge of the company comes from its market share which stands at around 38% of the online retail sales in the United States and with the easing cycle from the Fed the share and sales are only expected to grow further.
Amazon.com, Inc. (NASDAQ:AMZN) is the best high-growth NASDAQ stock that is profitable in 2024, we say this because not only has the company generated $44.4 billion in net income during the past 12 months but has also grown its free cash flow by 572% year-over-year.
Alphyn Capital Management stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2024 investor letter:
“Amazon.com, Inc.’s (NASDAQ:AMZN) continued growth is driven by its strong performance in AWS and advertising, which grew 19% and 20%, respectively. E-commerce growth moderated to 9.3%, likely due to softer consumer demand.
In previous letters, I mentioned how Amazon’s heavy investments in logistics and fulfillment suppressed margins for some time, but the company is now reaping the rewards of those earlier expenditures. European operations have been profitable for the second consecutive quarter, while North American operating margins have risen from pandemic lows to 5.3%. A key ongoing area of focus for Amazon has been reducing the “cost to serve”; this is beginning to show tangible benefits. In 2023, Amazon undertook a “regionalization” strategy, which divided the U.S. into eight distinct regions for fulfillment and transportation, with corresponding distribution centers in each. As I learned from an expert interview done by InPractise, “regionalization” has resulted in estimated shipping expenses dropping from $4.76 per unit to $4.50, and they are now approximately $4.26, with potential reductions of 2-3% annually. Interestingly, Amazon leaned on its third-party vendors (3P) to finance much of this strategy. It did so by requiring 3P vendors ship inventory to the multiple regional distribution centers, instead of to a single location as they used to do. Moreover, Amazon imposed penalties for failing to meet strict minimum and maximum quantities. In this way, Amazon used 3P inventory to expand its distribution capacity by around 24 million square feet, much of which it could use for its own 1P inventory. Clever strategy, but one wonders if this raises the risk of an eventual vendor backlash due to the added financial and logistical pressures on 3P sellers.
Like Alphabet, Amazon is investing heavily in its AWS infrastructure to support its growing AI business. In the first half of the year, the company spent $30.5 billion on capital expenditures, with plans to exceed that in the year’s second half. When questioned about this during the earnings call, CEO Andy Jassy emphasized that they are seeing significant demand for AI-related services, which he believes will become a “very large” business for Amazon.”
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ: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 timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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