In an interview with CNBC on October 14, Michael Kantrowitz, Chief Investment Officer at Piper Sandler noted that while the market is expensive, it’s not a reason to get bearish and that unless a risk arises, the market will likely stay expensive. Kantrowitz explains that the market’s valuation is driven by the pricing out of risks that existed two years ago, such as inflation and higher interest rates. He believes that if these risks were to resurface, it would be a reason to get worried, but currently, that’s not the backdrop.
He also notes that investors should focus on stocks with continued earnings momentum, as these names will likely see the best outperformance and can hold their expensive multiples for longer. Kantrowitz is not too concerned about higher bond yields but notes that they can be a problem at some point. He thinks that yields would need to reach 4.25% to show up in the broader market.
Regarding earnings revisions, Kantrowitz believes that revisions coming down have not overdone it and that it’s normal to see estimates from the sell-side start out high and then trickle down throughout the year. He expects to see more downward earnings revisions but notes that large-cap stocks have held up far better in terms of earnings, which is why they continue to outperform.
Tom Lee, Managing Partner and Head of Research at Fundstrat Global Advisors discussed the markets and his recent observations. Lee believes that the market’s resilience is due to the large amount of cash on the sidelines. He thinks that investors have been under-invested in stocks and that the market is becoming less dependent on macro data.
Lee pointed out that the market has been able to shrug off negative news and that the recent PPI and CPI reports were not enough to knock the market off track. He believes that the Fed will continue to be dovish, especially since inflation is still tracking towards the 2% target. Lee also thinks that the election, which is becoming less of a coin toss, is also contributing to the market’s conviction.
Regarding the impact of the election on the market, Lee believes that markets like visibility, but they also need to like what they see on the other side of the election. He thinks that whether Trump or Harris wins, stocks will do well next year, but there will be differences in sector and asset class performance depending on who wins.
While some may be concerned about the market’s expensive valuation, others see it as a sign of strength and resilience, with that in context, let’s take a look at the 10 most profitable stocks of the last 10 years.
Pixabay/Public Domain
Our Methodology
To compile our list of the 10 most profitable stocks of the last 10 years, we used the Finviz and Yahoo stock screeners to compile an initial list of the 30 largest companies by market cap. From that list, we narrowed our choices to companies with positive TTM net income and 10-year net income growth informed by reputable sources, including SeekingAlpha, which provided insights into 10-year growth rates, and Macrotrends, which supplied information on trailing twelve-month (TTM) net income. Our list is sorted in ascending order of the 10-year net income growth rates.
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 smallcap and largecap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Most Profitable Stocks of the Last 10 Years
10. ASML (NASDAQ:ASML)
10-Year Net Income CAGR: 16.30%
TTM Net Income: $7.30 Billion
Number of Hedge Fund Investors: 81
ASML (NASDAQ:ASML) is a Dutch company that manufactures advanced lithography equipment, which is essential for semiconductor production. As the sole supplier of extreme ultraviolet (EUV) lithography machines, ASML (NASDAQ:ASML) plays a crucial role in enabling the production of smaller, more powerful chips used in smartphones, computers, and other electronics.
On October 15, ASML (NASDAQ:ASML) reported its financial results for Q3, posting total net sales of $8.18 billion. The company achieved a gross margin of 50.8% and recorded a net income of $2.29 billion for the quarter. Additionally, the company reported quarterly net bookings of $2.83 billion, with $1.53 billion attributed to its EUV (extreme ultraviolet) lithography systems.
Looking ahead, ASML (NASDAQ:ASML) expects total net sales for the fourth quarter of 2024 to be between $9.59 billion and $10.03 billion, with a gross margin in the range of 49% to 50%. For the full year of 2024, the company anticipates total net sales to reach approximately $30.52 billion.
ASML’s (NASDAQ:ASML) technology is key to the advancement of Moore’s Law, making it a critical partner for the semiconductor industry. The company’s innovation and monopoly in EUV technology have driven its growth. With the AI revolution in full swing, ASML (NASDAQ:ASML) is poised for long-term outperformance due to strong demand for its equipment.
ASML’s (NASDAQ:ASML) strategic position in the semiconductor value chain makes it an attractive investment opportunity. Industry analysts are bullish on the company’s stock price and have a consensus Buy rating at a target price of $1,077.24, which implies a 38.38% increase from its current level.
9. Taiwan Semiconductor Manufacturing Company (NYSE:TSM)
10-Year Net Income CAGR: 16.52%
TTM Net Income: $29.91 Billion
Number of Hedge Fund Investors: 156
Taiwan Semiconductor Manufacturing Company (NYSE:TSM) is the world’s largest independent semiconductor manufacturer, playing a crucial role in the global tech supply chain by powering devices from smartphones to data centers. The company produces chips for leading global firms, including Apple, AMD, and NVIDIA. The company’s cutting-edge technology, particularly in advanced process nodes, has reinforced its position in high-performance computing and AI applications.
With a market share of nearly 30%, Taiwan Semiconductor Manufacturing Company (NYSE:TSM) remains a dominant force in the industry. The company’s advanced 2nm, 3nm, 5nm, and 7nm technologies and the latest innovations in 2nm and A16 process technologies are expected to further strengthen its market leadership.
Taiwan Semiconductor Manufacturing Company (NYSE:TSM) is also the manufacturer of Apple’s A16 chips, introduced in April 2024, which are designed for high-performance computing, featuring a complex signal route and dense power delivery network. Mass production is scheduled for the second half of 2026.
Taiwan Semiconductor Manufacturing’s (NYSE:TSM) 2nm (N2) process technology, which offers a 10% to 15% speed improvement at the same power or a 25% to 30% power reduction at the same speed, along with a more than 15% increase in chip density compared to 3nm chips, is anticipated to surpass 3nm and 5nm sales during their respective first two years. Volume production for this technology is set for 2025.
Taiwan Semiconductor Manufacturing’s (NYSE:TSM) advancements in 1.6nm and 2nm technologies give it a strong competitive edge. The company’s leadership in process technology below 7nm is expected to persist. The company is forecasted to grow its earnings by 23.61% this year. Industry analysts have a consensus on the stock’s Buy rating, with an average target price of $206.54 that suggests a 9.86% upside potential from its current levels.
8. Alphabet (NASDAQ:GOOG)
10-Year Net Income CAGR: 20.96%
TTM Net Income: $87.66 Billion
Number of Hedge Fund Investors: 165
Alphabet (NASDAQ:GOOG) is the parent company of Google, the world’s largest search engine, and a leader in digital advertising, cloud services, and artificial intelligence. Alphabet’s (NASDAQ:GOOG) diverse portfolio includes YouTube, Google Cloud, and Android, giving it a dominant presence across multiple sectors. The company continues to invest in innovative areas such as autonomous vehicles (Waymo) and life sciences (Verily).
Despite facing numerous challenges and threats to its dominance, Alphabet (NASDAQ:GOOG) remains a resilient company with a strong track record of innovation and growth. The company is growing its presence in emerging areas such as cloud computing, artificial intelligence, and online video.
Alphabet’s (NASDAQ:GOOG) Google search business remains a cash cow, with a market share of over 90% and growing search volumes. The company’s YouTube platform is the largest video-sharing platform in the world, with a vast library of content and a growing subscription base. Google Cloud is also gaining traction and a growing market share in the cloud infrastructure market. Furthermore, Alphabet’s (NASDAQ:GOOG) investments in artificial intelligence, including its Gemini AI platform, position the company for future growth and innovation.
Alphabet (NASDAQ:GOOG) has a long history of investing in research and development, this investment has led to the development of products and services such as Google Cloud, Google Assistant, and Google Home, which have become major contributors to the company’s revenue growth. Alphabet’s (NASDAQ:GOOG) commitment to innovation and R&D has also enabled the company to stay ahead of the competition and maintain its leadership position in the technology industry.
Alphabet (NASDAQ:GOOG) is a compelling investment due to its dominant position in search, its growing presence in emerging technologies such as cloud computing and artificial intelligence, and its strong financial performance. The company’s commitment to innovation and R&D, combined with its strong track record of growth and profitability, make it an attractive investment opportunity for those looking to benefit from the growth of the technology industry. Analysts estimate Alphabet’s (NASDAQ:GOOG) earnings will grow by 27.63% this year. With a consensus Buy rating from industry analysts, the stock has a target price of $198.85, which represents a 17.47% upside potential from its current level.
7. Advanced Micro Devices (NASDAQ:AMD)
10-Year Net Income CAGR: 32.53%
TTM Net Income: $1.35 Billion
Number of Hedge Fund Investors: 108
Advanced Micro Devices (NASDAQ:AMD) is a semiconductor company that develops high-performance computing and graphics solutions. The company’s processors are used in consumer electronics, gaming consoles, and data centers, with major clients including Sony, Microsoft and Hewlett-Packard.
Advanced Micro Devices (NASDAQ:AMD) has significantly expanded its market share through advances in processors for both consumer and enterprise applications. The company is also a leader in the AI space, with strong growth potential. Advanced Micro Devices (NASDAQ:AMD) MI300 accelerator is designed to compete with Nvidia’s H100 AI chip, and the company plans to release new AI chips annually to stay competitive in the industry.
On August 19, Advanced Micro Devices (NASDAQ:AMD) entered into a definitive agreement to acquire ZT Systems, a provider of AI infrastructure for computing companies, in a deal valued at $4.9 billion. This acquisition is expected to enhance the company’s AI capabilities and provide industry-leading systems expertise, enabling optimized rack-scale solutions. ZT Systems’ extensive experience in designing and optimizing cloud computing solutions will help cloud and enterprise customers accelerate the deployment of AMD-powered AI infrastructure at scale. The transaction is expected to be complete by the end of 2025.
Advanced Micro Devices (NASDAQ:AMD) presents a compelling investment opportunity in the AI space, with strong growth potential. The company’s leadership in AI-specific semiconductors and custom chip designs solidifies its position as a key industry player. The company’s earnings are projected to rise by 25.08% this year. Industry analysts have a consensus Buy rating, with an average target price of $187.69, suggesting an 18.03% upside potential from current levels.
6. Broadcom (NASDAQ:AVGO)
10-Year Net Income CAGR: 32.74%
TTM Net Income: $5.09 Billion
Number of Hedge Fund Investors: 130
Broadcom (NASDAQ:AVGO) is a technology company that designs, develops, and supplies semiconductor and infrastructure software solutions. The company produces chips for networking, broadband, enterprise storage, and wireless communication for industries such as telecommunications, and data centers.
Broadcom (NASDAQ:AVGO) is well-positioned to benefit from the increasing demand for AI semiconductors. According to Precedence Research, the global AI semiconductor market size was $56.42 billion in 2024 and is projected to reach $232.85 billion by 2034, growing at a CAGR of 15.23%. Broadcom (NASDAQ:AVGO) has already secured key AI customers, including Google, Meta, and ByteDance, and is expected to add Microsoft’s OpenAI as a fourth major customer. The company’s AI-specific chip designs are customized to meet the unique workload demands of hyperscale cloud providers, allowing the company to cater to their precise specifications.
Broadcom’s (NASDAQ:AVGO) acquisition of VMware, in late 2023, has significantly boosted its infrastructure software revenue, with a 200% year-over-year increase, contributing $3.8 billion from VMware in Q3. The integration of VMware has driven a 32% quarter-on-quarter increase in the annualized booking value for VMware Cloud Foundation.
Broadcom (NASDAQ:AVGO) is well-positioned to lead the AI semiconductor market, with AI contributing a growing share of its revenues. The company is expected to grow its earnings by 13.27% this year, and its leadership in AI-specific semiconductors, custom chip designs, and strong position within the AI ecosystem solidify its role as a key industry player, driving long-term growth and market leadership.
5. Meta Platforms (NASDAQ:META)
10-Year Net Income CAGR: 35.97%
TTM Net Income: $51.43 Billion
Number of Hedge Fund Investors: 219
Meta Platforms (NASDAQ:META) has been investing heavily in the development of the metaverse, a virtual world where users can interact in 3D spaces, which it believes will be the next frontier of social interaction. Meta Platforms (NASDAQ:META) generates most of its revenue from advertising by leveraging its massive user base and data-driven targeting to offer advertisers reach.
Meta Platforms’ (NASDAQ:META) AI development, particularly its open-source Llama models, is a game-changer. These models, designed to be used by developers worldwide, have been adopted by nearly 500 million monthly users. Moreover, AI-driven click-through rates have increased by 11%, and conversions have risen by 7.6%, driving revenue growth. In Q2, Meta Platforms’ (NASDAQ:META) ad revenues increased 22% year over year.
Meta Platforms’ (NASDAQ:META) investments in augmented reality (AR) hardware, particularly the Orion glasses, are also expected to revolutionize the way we interact with technology. While the glasses are not yet available to the public, the tech behind them is game-changing, with the potential to redefine how we interact with technology, moving beyond the smartphone.
Meta Platforms (NASDAQ:META) is positioning itself to dominate the tech landscape for years to come. The company’s innovative approach to AI and VR is not only driving significant user engagement and revenue growth but also setting it up for long-term success. As the world becomes increasingly digital, Meta Platforms (NASDAQ:META) is at the forefront of shaping the future of computing and interaction. With a strong financial foundation and a proven track record of innovation, Meta Platforms (NASDAQ:META) is an attractive investment opportunity for those with a long-term perspective. Analysts estimate the company’s earnings will grow by 35.78% this year.
4. Netflix (NASDAQ:NFLX)
10-Year Net Income CAGR: 42.58%
TTM Net Income: $7.09 Billion
Number of Hedge Fund Investors: 103
Netflix (NASDAQ:NFLX) is the world’s leading streaming entertainment service, offering TV shows, documentaries, and movies across a wide range of genres and languages. With over 278 million paid memberships in over 190 countries, Netflix (NASDAQ:NFLX) has revolutionized the way people consume media. The company continues to expand its content library, producing original series and films.
Netflix (NASDAQ:NFLX) performance has been impressive, with a $9.56 billion revenue in Q2, a 16.8% year-over-year increase. The company’s operating profit margin also increased to 27.2%. Netflix’s (NASDAQ:NFLX) focus on international markets and investments in local content have helped the company maintain its subscriber growth and competitive edge.
The company’s global expansion story is also worth noting, particularly in Latin America, where Netflix (NASDAQ:NFLX) generated a revenue of $1.2 billion in Q2. With high regional GDP growth rates, analysts expect Latin America’s top-line growth to sustain into 2025 and beyond. The company’s Europe, Middle East, and Africa (EMEA) also adds additional potential, with regional fx-adjusted growth expected to accelerate once Netflix (NASDAQ:NFLX) optimizes its content through comprehensive data aggregation and downstream enhancements.
Furthermore, Netflix’s (NASDAQ:NFLX) advertising business is expected to drive broad-based revenue growth. The company’s tier-based approach avoids bombarding subscribers with unaligned advertising, and its substantial cash position provides a noteworthy product development budget. The company’s robust brand name also provides access to large-scale business-to-business partnership programs, such as its direct accessibility on various hardware devices, allowing for additional exposure and user uptake.
Netflix’s (NASDAQ:NFLX) popularity among teenagers is also a positive sign, with the company remaining the top streaming choice for this demographic. Netflix’s (NASDAQ:NFLX) earnings are expected to increase by 45.57% this year.
3. T-Mobile US (NASDAQ:TMUS)
10-Year Net Income CAGR: 48.28%
TTM Net Income: $9.45 Billion
Number of Hedge Fund Investors: 64
T-Mobile US (NASDAQ:TMUS) is one of the largest wireless carriers in the United States, known for its pricing strategies and customer-centric approach. T-Mobile US (NASDAQ:TMUS) expanding its 5G coverage and offering competitive unlimited data plans has helped the company become a strong player in the telecommunications industry.
T-Mobile US (NASDAQ:TMUS) has been making waves in the technology and telecommunications industry with its recent announcements, particularly in the area of Artificial Intelligence (AI). At the Capital Markets Day on September 18, the company unveiled two significant partnerships: one with OpenAI, and another with Nvidia.
T-Mobile US’s (NASDAQ:TMUS) partnership with OpenAI is focused on developing a new customer service offering called IntentCX. This platform uses OpenAI’s GPT foundation models to analyze customer usage data and provides personalized support. By automating support processes and providing personalized experiences, T-Mobile US (NASDAQ:TMUS) can reduce the need for third-party call centers, retail stores, and support personnel, resulting in significant cost savings.
The partnership with Nvidia is centered around creating an AI RAN Innovation Center in T-Mobile’s headquarters. This facility will explore the possibilities of enhancing the company’s Radio Access Network (RAN) with AI. T-Mobile US’s (NASDAQ:TMUS) Aerial software will be used to improve RAN performance and enable new revenue opportunities. This technology has the potential to optimize network traffic, improve speed and capacity, and reduce costs.
The Aerial software is designed to improve the performance of the Radio Access Network (RAN) that provides the core signal transfers for all mobile networks. It also offers the ability to run AI workloads within those mobile networks. By integrating GPU-powered computing capabilities into their networks, T-Mobile US (NASDAQ:TMUS) can become an AI-as-a-service provider, presenting a more compelling for telco operators and a more realistic potential for generating new revenues.
T-Mobile US (NASDAQ:TMUS) efforts to integrate AI into its network infrastructure and customer service are poised to drive growth and innovation. The company is well-positioned to capitalize on the growing demand for 5G services and AI-powered solutions. Analysts estimate that T-Mobile US (NASDAQ:TMUS) is expected to achieve 28.88% earnings growth this year.
2. NVIDIA (NASDAQ:NVDA)
10-Year Net Income CAGR: 58.47%
TTM Net Income: $53.01 Billion
Number of Hedge Fund Investors: 179
NVIDIA (NASDAQ:NVDA) is a global leader in graphics processing units (GPUs) and a pioneer in AI, gaming, and data center technology. The company’s GPUs are widely utilized in gaming, deep learning, and high-performance computing. NVIDIA’s (NASDAQ:NVDA) AI and machine learning solutions have been adopted across various industries, including healthcare, automotive, and finance. Notable customers include Amazon Web Services, Google Cloud, and Tesla.
NVIDIA (NASDAQ:NVDA) is positioned for ongoing growth, driven by its strong presence in the data center market and the upcoming Blackwell chip. Blackwell is highly sought after by companies such as OpenAI, Microsoft, and Meta, who are building AI data centers to support their products. The Blackwell GPUs, priced between $30,000 and $40,000 each, are already being distributed to data centers and industrial customers for AI applications, with consumer availability expected in 2025.
In a CNBC interview, CEO Jensen Huang remarked that “Blackwell is in full production and demand for Blackwell is insane,” adding, “Everybody wants to have the most and everybody wants to be first.” NVIDIA’s (NASDAQ:NVDA) leadership in accelerated computing and generative AI is also a key factor in its growth outlook.
NVIDIA (NASDAQ:NVDA) is poised to benefit from the expanding enterprise AI market, along with growing opportunities in the automotive and healthcare sectors, as its products and solutions gain traction in these areas.
In Q2, global spending on cloud infrastructure rose by 19% year-over-year to $78.2 billion, according to Canalys. Hyperscalers are expected to spend approximately $160 billion on AI infrastructure in 2024.
With its robust position in the data center market and emerging opportunities in various industries, NVIDIA (NASDAQ:NVDA) is well-positioned to capitalize on these trends and drive further growth. Analysts estimate that the company’s earnings will grow by 81.88% this year. With a consensus Buy rating from industry analysts, the stock has a target price of $148.53, which represents a 12.08% upside potential from its current level.
1. Amazon.com (NASDAQ:AMZN)
10-Year Net Income CAGR: 73.38%
TTM Net Income: $44.42 Billion
Number of Hedge Fund Investors: 308
Amazon.com (NASDAQ:AMZN) is a global e-commerce and cloud computing giant, offering a wide range of products and services. The company’s Amazon Web Services (AWS) is the market leader in cloud infrastructure, contributing significantly to the company’s profitability. Amazon.com’s (NASDAQ:AMZN) growth has been driven by its diverse business model, which includes e-commerce, logistics, entertainment (Prime Video), and artificial intelligence (Alexa). The company’s focus on customer satisfaction and innovation continues to fuel its dominance in multiple industries and is one of the largest companies in the world.
One of the key drivers of Amazon.com’s (NASDAQ:AMZN) growth is its leadership in the cloud computing market, with a 31% market share. The company’s cloud business is expected to continue to drive growth, driven by the increasing adoption of cloud computing and the growing demand for data storage and analytics. Additionally, Amazon.com’s (NASDAQ:AMZN) e-commerce business is expected to continue to benefit from the growing trend of online shopping, with the company’s strong logistics and supply chain capabilities allowing it to offer fast and reliable shipping to its customers.
Amazon’s innovative technologies, including its artificial intelligence (AI) and robotics capabilities, are also expected to drive growth and improve the company’s operating efficiency. The company’s AI-powered advertising platform, for example, has improved the effectiveness of its advertising business, while its robotics division has improved the efficiency of its logistics operations.
Furthermore, Amazon’s international expansion is expected to drive growth, with the company having lower penetration in certain regions. The company’s international segment has already started to show signs of improvement, with an operating margin of 5.63% in North America and 0.5% in international markets.
Amazon.com’s (NASDAQ:AMZN) strong fundamentals, diversified revenue streams, and innovative technologies make it an attractive investment opportunity. The company’s earnings are projected to increase by almost 48% in the current year. Industry analysts have reached a consensus on the stock’s Buy rating, with an average target price of $218.90 that suggests an 15.35% upside potential from its current levels.
While we acknowledge the potential of Amazon.com (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 an AI stock that is more promising than AZMN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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