High-valuation stocks are typically characterized by metrics such as high price-to-earnings (P/E) ratios, price-to-sales ratios, and enterprise value to EBITDA (EV/EBITDA) multiples. These high valuations often mean strong investor confidence in a company’s future growth potential. However, they also imply that the market has priced in substantial future earnings growth, leaving less margin for error if the company fails to meet expectations.
Investing in high-valuation stocks has been a subject of debate among investors for some time. While some investors argue that these stocks are overvalued and pose a risk of correction, others view them as opportunities to gain exposure to industry leading companies with strong growth potential. In the U.S. market, high-valuation stocks are often associated with technology, healthcare, and consumer sectors, where innovation, brand strength, and market dominance justify their premium pricing.
Support for High-Valuation Stocks
The current market environment has been supportive of high-valuation stocks. In a February interview with CNBC, Fidelity Investments’ Director of Global Macro, Jurrien Timmer, noted that the bull market, which is around 28 months old now, has delivered substantial returns. While some market cycles end around the 30-month mark, history shows that many extend further. Strong earnings performance has supported valuations, with 78% of companies beating expectations in the fourth-quarter earnings season.
Echoing this sentiment, in a February discussion on CNBC, Ed Yardeni of Yardeni Research highlighted that while valuations are stretched, the earnings landscape remains strong. He emphasized that stock markets are primarily driven by earnings and valuation dynamics. Even though high-valuation stocks like the “Magnificent Seven” have stopped rising on a valuation basis, their earnings potential continues to look promising. Sectors like AI, robotics, and automation remain key drivers of long-term growth, fuelling investor confidence.
While earnings continue to support valuations, some experts argue that broader macroeconomic conditions play an equally important role. Julian Emanuel, senior managing director at Evercore ISI, provided good context in CNBC’s ‘Closing Bell’ program on March 19. He noted that valuations have moderated from “very expensive” to just “expensive,” suggesting that some of the issues have been factored in. More importantly, he emphasized that valuation alone does not end bull markets. Unlike previous cycles, where an uncooperative Federal Reserve contributed to market downturns, Emanuel believes that the Fed’s expected rate cuts in 2025 will provide continued support. Additionally, he points out that bond yields have remained contained, which reduces competition for equities and supports higher valuations.
Despite concerns over rising bond yields and a maturing economic cycle, the fundamentals of the U.S. economy remain strong. Ed Yardeni pointed to steady employment levels and robust retail sales growth, which suggest that consumer spending remains healthy. As long as corporate earnings continue to support current valuations, the case for investing in high-valuation stocks remains intact.
Risks From Yields and Sector-Specific Issues
That said, these stocks aren’t without risks. One of the biggest risks to high-valuation stocks is the potential for higher interest rates. Research has pointed out that if long-term yields rise above 5%, it could create more competition for equities. When risk-free returns from government bonds become more attractive, investors may demand higher risk premiums from stocks, leading to valuation corrections.
Additionally, sector-specific challenges can impact high-valuation stocks. For example, companies in the artificial intelligence (AI) and cloud computing sectors, have generally received high valuations based on growth expectations. When expectations are reset due to some sector dynamics, these stocks often tend to correct first.
Investors looking to invest in high-valuation stocks should focus on companies with strong fundamentals and long-term growth drivers. Companies with dominant market positions, innovative product offerings, and recurring revenue models tend to justify their premium valuations.
A successful business owner seeing their business valuation soar on the capital markets.
Our Methodology
To identify the 10 high-valuation stocks favoured by billionaires, we began by using online stock screeners to filter companies trading at a forward price-to-earnings (P/E) ratio between 50 and 150, as valuations above this range tend to carry higher risk due to elevated growth expectations. Next, we analyzed Insider Monkey’s database of billionaire holdings to determine which of these high-valuation stocks were most favoured by billionaire investors. Finally, we ranked top 10 of the shortlisted stocks in ascending order based on the number of billionaire investors holding stakes in each company as of Q4 2024. Additionally, we provided insights into hedge fund sentiment surrounding these stocks using Insider Monkey’s Q4 2024 hedge fund holdings database.
Note: All pricing data is as of market close on March 21.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 High-Valuation Stocks to Buy According to Billionaires
10. CrowdStrike Holdings Inc. (NASDAQ:CRWD)
Forward P/E: 105.3
Number of Billionaire Investors: 15
Number of Hedge Fund Holders: 77
CrowdStrike Holdings Inc. (NASDAQ:CRWD) is a leading cybersecurity company specializing in cloud-native endpoint protection, threat intelligence, and incident response services. Its flagship Falcon platform leverages artificial intelligence (AI) and behavioural analytics to detect and prevent cyber threats in real-time. CrowdStrike serves enterprises and government agencies worldwide.
Aristotle Atlantic Partners, LLC, an investment advisory firm, in its Q4 2024 Core Equity Strategy investor letter, highlighted their outlook for strong growth in cloud cybersecurity as businesses shift from on-premises to cloud systems. They see CrowdStrike Holdings Inc. (NASDAQ:CRWD) as well-positioned to benefit due to its early entry, broad product offerings, and strong cloud integrations. Rising cyber threats, particularly from AI-driven state-sponsored attacks, are boosting demand for advanced security. With the total addressable market set to expand over four years, the company’s cloud-native platform and high customer retention provide a strong competitive edge.
In another positive development, a Bank of America analyst reiterated a Buy rating and maintained a $420 price target for CrowdStrike shares in a report published around March 19. The analyst highlighted his meetings with Burt Podbere, the CFO of CrowdStrike Holdings Inc. (NASDAQ:CRWD), and Anurag Saha, the Chief Accounting Officer, after which he felt more confident about the company’s ability to recover strongly after the impact of the July outage.
The analyst explained to investors that CrowdStrike’s strategic and financial measures taken after the outage have positioned the company well for growth. According to the analyst, management expects the net new ARR (nnARR) to show improvement in the second half of the year and anticipates that concerns about lingering effects of the outage will fade completely by that time.
9. Reddit Inc. (NYSE:RDDT)
Forward P/E: 87.7
Number of Billionaire Investors: 15
Number of Hedge Fund Holders: 87
Reddit Inc. (NYSE:RDDT) is a social media and online discussion platform where users participate in conversations across thousands of communities, known as “subreddits.” By combining user-generated content, discussion forums, and trending topics, the company has built a highly engaged audience.
Reddit Inc. (NYSE:RDDT) primarily generates revenue through digital advertising and premium subscriptions. As online communities continue to shape digital interactions, the company remains a key player in the social media space, leveraging data-driven ad placements and community engagement to drive growth. In the three months ended December 31, 2024, Reddit reported an average of 101.7 million daily active uniques (DAUq) globally.
The stock has experienced significant volatility since the beginning of the year, falling over 50% in the month leading up to March 10. Investor sentiment turned negative due to weaker user growth in the latest quarter, impacted by Google’s search algorithm changes and a broader sell-off in the technology sector.
Reddit Inc. (NYSE:RDDT) shares saw a modest recovery after a Loop Capital analyst deemed it highly attractive following the sharp decline. The analyst reiterated a Buy rating with a $210 price target, expecting ARPU growth to be driven by improved ad tools, potential product-matching features similar to Meta’s Advantage+, expanded advertising opportunities—including a higher ad load on comment pages and possible search ads—and stronger auction dynamics as more advertisers join the platform. The analyst projects 36% revenue growth and 87% EBITDA growth for the year.
8. Palantir Technologies Inc. (NASDAQ:PLTR)
Forward P/E: 169.5
Number of Billionaire Investors: 16
Number of Hedge Fund Holders: 64
Palantir Technologies Inc. (NASDAQ:PLTR) is a software company that builds and deploys data integration and analytics platforms for both government and commercial clients. The company’s flagship products including Palantir Gotham and Palantir Foundry, enable users to analyze large datasets for actionable insights. Its solutions are widely used in defense, healthcare, and financial services, among other sectors.
Palantir Technologies Inc. (NASDAQ:PLTR) has seen rapid growth in its Artificial Intelligence Platform (AIP), driving higher revenue and profitability. Investor confidence was further boosted by real-world applications showcased at its AIPCon 6 event and new partnerships with Databricks, Saronic Technologies, Archer, and Saildrone, expanding its enterprise solutions.
However, the stock has recently faced pressure as the U.S. Department of Defense (DOD) implements budget cuts across multiple programs, contracts, and grants, including a recently announced $580 million reduction. On the brighter side, on March 13, Loop Capital analyst Mark Schappel reaffirmed his Buy rating on Palantir Technologies Inc. (NASDAQ:PLTR) after meeting with management, which increased his conviction in company’s leadership in enterprise AI. He noted accelerating AI adoption but also highlighted risks from potential federal spending cuts and high valuation. While maintaining a positive outlook, he lowered the price target from $141 to $125 due to industry-wide valuation compression.
7. Datadog Inc. (NASDAQ:DDOG)
Forward P/E: 55.9
Number of Billionaire Investors: 17
Number of Hedge Fund Holders: 83
Datadog Inc. (NASDAQ:DDOG) is a cloud-native monitoring and security platform that provides real-time observability for IT infrastructure, applications, and security environments. The company serves enterprises by offering comprehensive analytics across logs, metrics, traces, and network performance, enabling DevOps and IT teams to optimize operations and enhance cybersecurity.
Around February 14, TD Cowen analyst Andrew Sherman reaffirmed a Buy rating on the company with a $165 price target. He highlighted the strong 25% revenue growth in latest quarter which surpassed the 21% guidance, and a high of $1 billion in bookings. Additionally, Datadog Inc. (NASDAQ:DDOG) witnessed its net retention rate improve and recorded its highest new customer additions of the year. Sherman also believes that the optimism around AI-native systems, log solutions, and sales expansion indicate further growth.
Further, the analyst considers the revenue guidance as conservative, suggesting potential upside. As per him, sales and marketing expenses are expected to rise as hiring accelerates, which reflect strong demand. Management’s focus on AI-native solutions and log management strengthens Datadog’s competitive edge. In addition, company’s $3 billion in annual recurring revenue and strong free cash flow margins, keep the company a top investment opportunity.
6. Snowflake Inc. (NYSE:SNOW)
Forward P/E: 144.9
Number of Billionaire Investors: 18
Number of Hedge Fund Holders: 85
Snowflake Inc. (NYSE:SNOW) is a cloud-based data platform that helps organizations efficiently store, analyze, and share data. Its Data Cloud enables businesses to consolidate data together in one secure and reliable place, driving innovation and valuable insights. The platform supports a variety of workloads, including data engineering, data science, and application development.
In its Q4 2024 investor letter for the “Focused Growth Strategy,” Burke Wealth Management announced new positions in Snowflake Inc. (NYSE:SNOW), citing improved business trends and greater visibility. The firm noted that consumption patterns in Snowflake’s core business have stabilized and are showing signs of growth. Additionally, the company has introduced several AI-driven product offerings to its platform. Burke Wealth Management also believes that Snowflake will play a major role in enabling enterprises to access and securely integrate AI solutions with their data, whether proprietary or from trusted partners. They further highlight that by facilitating productivity-enhancing business insights, Snowflake is positioned to benefit from the massive investments being made in artificial intelligence.
On March 8, Robert W. Baird analyst William Power had reaffirmed a Buy rating on Snowflake Inc. (NYSE:SNOW) with a $200 price target, based on its strong position in data storage and analytics. He highlighted the company’s AI-driven focus and new features in FY 2025 further enhance Snowflake’s appeal among data engineers and scientists, supporting its growth potential.
5. Intuitive Surgical Inc. (NASDAQ:ISRG)
Forward P/E: 62.1
Number of Billionaire Investors: 18
Number of Hedge Fund Holders: 95
Intuitive Surgical Inc. (NASDAQ:ISRG) is a pioneer in robotic-assisted surgery, best known for its da Vinci Surgical System. The company’s advanced robotics enable minimally invasive procedures, improving surgical precision and patient outcomes. Intuitive Surgical has a strong global presence, with its technology widely adopted in hospitals and surgical centers.
In a March 20 report, Wells Fargo analyst Larry Biegelsen reiterated a Buy rating on Intuitive Surgical Inc. (NASDAQ:ISRG) with a $687 price target. His bullish stance was driven by the company’s recent FDA 510(k) clearance for its SP stapler, which is expected to boost adoption of the SP platform in the U.S. This approval is particularly significant for thoracic and colorectal procedures, where Intuitive Surgical anticipates increased commercial activity.
The analyst further notes that management views the SP stapler as essential for optimizing these surgeries, which could accelerate the platform’s broader adoption. A limited launch is planned in the coming months, signalling a strategic effort to expand its market presence. All these factors supported a positive outlook for the company and the Buy rating from the analyst.
4. ServiceNow Inc. (NYSE:NOW)
Forward P/E: 50.5
Number of Billionaire Investors: 19
Number of Hedge Fund Holders: 110
ServiceNow Inc. (NYSE:NOW) provides a cloud-based platform for digital workflows, enabling organizations to automate and optimize their business processes. Its Now Platform offers solutions across IT service management, customer service, HR, and other areas.
ServiceNow Inc. (NYSE:NOW) is well-positioned to capitalize on the growing demand for workflow automation as a key player in the enterprise software market. To increase the depth of its services, the company recently announced the acquisition of AI firm Moveworks, whose AI assistant and enterprise search technology are expected to enhance ServiceNow’s AI and automation capabilities.
The acquisition was largely seen as a positive move. On March 11, a Mizuho analyst reaffirmed an Outperform rating after ServiceNow Inc. (NYSE:NOW) announced the $2.85 billion deal. The analyst noted that integrating Moveworks’ enterprise-grade search into company’s extensive customer base would strengthen its AI monetization. He described Moveworks as an “attractive asset” that enhances the company’s already strong AI positioning. However, due to recent compression in comparable valuation multiples, the analyst lowered his price target from $1,210 to $1,100.
3. Shake Shack Inc. (NYSE:SHAK)
Forward P/E: 70.4
Number of Billionaire Investors: 14
Number of Hedge Fund Holders: 43
Shake Shack Inc. (NYSE:SHAK) is a fast-casual restaurant chain known for its made-to-order Angus beef burgers, crispy chicken, hand-spun milkshakes and more. The company originating as a New York City food stand and since then has expanded into a global brand with locations in major cities worldwide. It differentiates itself with high-quality ingredients, sustainability efforts, and a strong brand identity.
On February 21, a Truist Securities analyst raised the price target on Shake Shack Inc. (NYSE:SHAK) from $143 to $154 while maintaining a Buy rating. As the basis of his bullish stance, the analyst pointed to the company’s strong Q4 earnings, better-than-expected Q1 comparable sales guidance, and an upward revision in FY25 adjusted EBITDA outlook. He believes that despite challenges like weather disruptions, wildfires, and a tough macro environment, the company’s continued same-store sales momentum reflects its strong market position.
2. GE Vernova Inc. (NYSE:GEV)
Forward P/E: 52.1
Number of Billionaire Investors: 20
Number of Hedge Fund Holders: 111
GE Vernova Inc. (NYSE:GEV) is a newly formed entity as part of General Electric’s split in early 2024. The company is a prominent name in electric power industry and focusses on products and services including generation, transfer, conversion, and storage. It operates across renewable energy, power generation, and grid technologies, playing a key role in decarbonization efforts.
An RBC Capital analyst lowered the price target on GE Vernova Inc. (NYSE:GEV) from $453 to $445 while maintaining an Outperform rating, in a March 18 report. The analyst noted that ISO filings indicate combined cycle gas turbine (CCGT) equipment costs have risen another 15% since November, with gas turbines up about 30%, which signals strong market demand. This reinforces the long-term growth potential from price increases. While the analyst raised EPS estimates for FY 2026 and 2027, he adjusted the price target to reflect current market conditions.
On March 19, Barclays analyst Julian Mitchell also reiterated his Buy rating on the company with a price target of $427, implying a 28% upside potential.
1. Tesla, Inc. (NASDAQ:TSLA)
Forward P/E: 89.3
Number of Billionaire Investors: 21
Number of Hedge Fund Holders: 126
Tesla, Inc. (NASDAQ:TSLA) is an electric vehicle (EV) manufacturer and clean energy company known for its innovative approach to sustainable transportation and energy solutions. It designs, manufactures, and sells electric vehicles, battery energy storage systems, solar products, and related services. It currently manufactures five different consumer vehicles: the Model 3, Y, S, X, and the Cybertruck. Its strong presence in EV technology, autonomous driving, and AI positions it as a tech-driven company rather than just an automaker.
Since the new U.S. president took office on January 20, Tesla Inc. (NASDAQ:TSLA) shares have dropped by as much as 50%. A key reason behind this decline has been investor concerns about CEO Elon Musk’s increasing involvement with the Department of Government Efficiency (DOGE), raising fears that it could be diverting his attention from Tesla. Additionally, declining sales and market volatility have added pressure on the stock.
Acknowledging these challenges, Morgan Stanley analyst Adam Jonas lowered his price target on Tesla Inc. (NASDAQ:TSLA) from $430 to $410 but maintained an Overweight rating in his March 21 report. He noted that while Tesla’s auto deliveries in 2024 have been weaker than expected, this does not alter the overall investment outlook. The analyst believes that Tesla’s current slowdown is part of a transition from being a pure-play automaker to a broader AI and robotics company. Despite the volatility and non-linear progress, he remains confident that 2025 will be a year where investors increasingly recognize Tesla Inc. (NASDAQ:TSLA)’s leadership in embodied AI, an area where he sees the company maintaining a strong competitive edge.
While we acknowledge the potential of TSLA 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 TSLA 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 30 Best Stocks to Buy Now According to Billionaires.
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