In this article, we will take a look at the 10 most promising tech stocks according to hedge funds.
NASDAQ is Poised for Long-Term Returns
Big tech is expected to outperform in the coming months. On October 2, Ari Wald, Oppenheimer’s Head of Technical Analysis, appeared in an interview on Yahoo Finance to discuss his market thesis and explain why investors must consider high-growth companies.
Wald highlights that market breadth is expected to remain high supporting extended highs throughout the end of 2024. In addition to that, he expects the bull cycle to remain intact and believes the trend will continue in 2025. During the late summer, the market saw a change in the high beta versus low volatility ratio stocks. It was seen that high-beta stocks could not keep up with high dividend-paying and lower-volatility names.
Given the rotational nature of the market, Wald expects higher beta names to make a strong comeback and reclaim their leadership position. Wald suggests that investors should consider investing in higher growth companies, as the Nasdaq and Russel 100 are expected to lead again. Trends show that the mag seven is growing and climbing, as the market conditions continue to settle.
Viewing Tech Stocks on Valuations Alone is Wrong, Strategist Says
Technology stocks have more room to run. On October 14, Malcolm Ethridge, Capital Area Planning Group managing partner, appeared in an interview on CNBC where he discussed the technology market outlook and revealed his favorite picks.
Ethridge suggests that judging stocks based on their valuations alone is a big mistake, especially in the current market cycle which is heavily influenced by the AI boom. Looking at the broader perspective, he believes there are a lot of positive opportunities among the magnificent seven and outside of it.
He adds that companies among the mega tech have been pouring billions into generating large language models and the likes of it. He also suggests that most of this technology is yet to be understood and therefore the true value we can derive from these technologies is yet to come. These companies also have a lot of intrinsic value and there is more to be realized soon.
Now that we have studied the technology market outlook, let’s take a look at the most promising tech stocks according to hedge funds. You can also read our piece on the most promising AI stocks according to analysts.
A leading semiconductor chip on a computer robot arm, reflecting the technology advances of the company.
Our Methodology
To come up with the most promising technology stocks according to hedge funds, we sifted through multiple ETFs, our own rankings, and similar rankings on the internet. We then ranked the most promising tech stocks based on the hedge fund sentiment as of Q2 2024.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Most Promising Tech Stocks According to Hedge Funds
10. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 69
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a cybersecurity company that ranks 10th on our list of the most promising tech stocks according to hedge funds. The company provides a range of security products including identity management, threat intelligence, and threat detection.
The company has 29,000 clients in multiple sectors including healthcare, retail, technology, and the government, reflecting its strong position in the market. Its AI native cybersecurity platform, Falcon is its primary product, growing at 80% year-over-year, in FQ2 2025. Despite the July 19 incident, CrowdStrike Holdings, Inc. (NASDAQ:CRWD) has been resilient and showcased transparency and accountability to its customers. In the past 40 days, the company closed crucial partnerships, added innovations to its Falcon Platform, and expanded its CrowdStrike Marketplace to meet the growing demand for cybersecurity solutions.
On August 29, Eric Heath, KeyBanc Capital Markets equity research analyst, appeared in an interview on Yahoo Finance to discuss his stance on CRWD. He suggested that despite its global outage in July, the long-term opportunity CRWD offers remains intact. He also added that the company is taking corrective action to avoid such incidents in the future and suggested the company has grown since the incident and will continue to do so.
As our reliance on software increases so does the need for cybersecurity, which makes CrowdStrike Holdings, Inc. (NASDAQ:CRWD) an important stakeholder now and in the coming years. That said, according to our Insider Monkey database, 69 hedge funds were bullish on the stock at the close of Q2 2024.
9. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 81
ASML Holding N.V. (NASDAQ:ASML) is a semiconductor equipment company headquartered in the Netherlands. Companies use ASML’s extreme ultraviolet (EUV) lithography machines to develop AI chips.
In the second quarter of 2024, ASML Holding N.V. (NASDAQ:ASML) logged $6.91 (EUR 6.2 billion) in revenue and expects net sales to grow to somewhere between $7.47 billion (EUR 6.7 billion) and $8.14 billion (EUR 7.3 billion) in Q3 2024.
ASML Holding N.V. (NASDAQ:ASML) believes 2024 is a transition year and will continue to invest in increasing its capacity and improving its technology to meet the surging demand in 2025. For its 2030 guidance, ASML Holding N.V. (NASDAQ:ASML) projected between EUR 44 billion and EUR 60 billion in revenue. The company has an 83% market share in lithography, explaining why 81 hedge funds were long on the stock at the end of Q2 2024.
According to the company’s CEO, semiconductor inventory and litho tool utilization levels have consistently improved over the past few months for both logic and memory customers. While the macroeconomic and geopolitical environment is turbulent, ASML Holding N.V. (NASDAQ:ASML) expects the industry to recover during the second half of 2024.
Polen Capital Polen International Growth Strategy stated the following regarding ASML Holding N.V. (NASDAQ:ASML) in its fourth quarter 2023 investor letter:
“Netherlands-based ASML Holding N.V. (NASDAQ:ASML) and Japan-based Lasertec play dominant roles within different segments of the global semiconductor industry. In both cases, shares rallied significantly in the fourth quarter of 2023, prompting our positions to grow as a percentage of the overall portfolio. We believe both companies will see demand for their products as extreme ultraviolet (EUV) lithography and soon high-numerical aperture lithography must be utilized to manufacture the world’s smallest chips. However, in our estimation, 2024 could deliver a year of less exciting growth for the semiconductor industry, which prompted us to trim these positions back.”
8. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 100
QUALCOMM Incorporated (NASDAQ:QCOM) is one of the most promising tech stocks according to hedge funds. The semiconductor company produces hybrid AI architecture applicable to most generative AI applications and devices including phones, laptops, XR headsets, cars, and IoT.
Speaking of AI, during the fiscal third quarter of 2024, the company launched its new chips for PCs capable of power efficiency and personalized AI experiences. The launch of these chips positions QUALCOMM as a growing intelligent computing company. In addition to that, QUALCOMM Incorporated (NASDAQ:QCOM) announced the launch of its new Networking Elite platform, capable of revolutionizing networking connectivity with Edge AI. Last week, the company also collaborated with STMicroelectronics to develop the next generation of industrial and consumer IoT solutions backed by Edge AI.
Overall, QUALCOMM Incorporated (NASDAQ:QCOM) is well-positioned to exploit the AI wave and become a market leader. As for its supposed Intel acquisition, if it comes through, the company will have access to multiple foundries, allowing it to compete with giants like Taiwan Semiconductor.
On that, Cory Johnson Futurum Group’s chief market strategist, appeared on Yahoo Finance to shed light on the possible takeover. According to Johson, the deal is one of the biggest in the history of the semiconductor industry. He adds that Intel was once the largest company in the industry, but it no longer holds that position, and adding chips into data centers has not worked out for them. He suggests that the deal will take QCOM into a new realm and position it as a contender to become a leader in the industry.
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 124
Advanced Micro Devices, Inc. (NASDAQ:AMD) ranks seventh on our list of the most promising technology stocks according to hedge funds. The semiconductor and IT company produces accelerators that are capable of managing complex AI workloads. These accelerators have high bandwidth memory and a huge memory density.
Previously in July, Advanced Micro Devices, Inc. (NASDAQ:AMD) announced the launch of an AI-backed smart parking solution that improves vehicle license plate recognition accuracy, parking spot vacancy detection, and accident detection. On October 10, the company launched new processors able to power the next generation of commercial PCs. On the same day, the company launched high-performance computing solutions to keep up with the AI computing era.
In the second quarter of 2024, the company generated $5.8 billion in revenue, up by 9% year-over-year. Most of the revenue came from revenue growth in data center and client segments. During the same quarter, net income grew by a staggering 881% year-over-year.
Overall, the company is leading the AI and technology wave with its advanced accelerators and processors. Advanced Micro Devices, Inc. (NASDAQ:AMD) expects to deliver strong results in the second half of the year due to advances in AI.
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.”
6. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 120
Micron Technology, Inc. (NASDAQ:MU) ranks sixth on our list of the most promising technology stocks according to hedge funds. The semiconductor company is home to intelligent infrastructure enabling the development of artificial intelligence and generative AI applications. Its primary offerings include memory and storage products.
In the fiscal year 2024, Micron Technology, Inc. (NASDAQ:MU) grew its revenue by 62% and gross margins by more than 30 percentage points, driven by growth in its data center and automotive segments. During the year, the company invested $8.1 billion in capital expenditures and expects capex to be considerably higher in 2025.
For the fiscal first quarter of 2025, Micron Technology, Inc. (NASDAQ:MU) expects revenue to reach $8.7 billion and gross margin at 39.5%. The company is also a market leader in its DRAM and NAND technologies, accounting for 69% and 31% of its revenue respectively.
On September 26, Dan Morgan, Synovus Trust’s senior portfolio manager, appeared in an interview on Yahoo Finance to share his outlook on MU. According to Morgan, MU is benefiting from the AI boom and the company has only started to accelerate. Morgan adds that its smartphone and PC segment is not doing as well as its data center segment. However, the company is slowly solidifying and it may take a couple more quarters to see strong returns.
The company is shifting its complete focus to meeting the demands for artificial intelligence and data center customers, two of the fastest-growing industries. The company’s leadership in process technologies promises strong growth and higher returns.
Baird Chautauqua International and Global Growth Fund stated the following regarding Micron Technology, Inc. (NASDAQ:MU) in its Q3 2024 investor letter:
“After Micron Technology, Inc.’s (NASDAQ:MU) price appreciated 54% in 1H24, investors became anxious about potential memory weakness, less clear cyclical recovery pace, and whether competitor Samsung will act rationally with capacity expansion. We maintain our long-term positive view on the industry’s demand/supply situation. We believe Micron is well positioned in technology capability, and that its margins will continue to improve.”
5. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 130
Broadcom Inc. (NASDAQ:AVGO) ranks fifth on our list of the most promising technology stocks according to hedge funds. The semiconductor company designs, develops, and supplies semiconductor software infrastructure products. Some of its products include cable modems, networking processors, and storage adapters.
This year, Broadcom Inc. (NASDAQ:AVGO) launched two breakthrough technologies for artificial intelligence infrastructure, the industry’s first switch platform for scalable AI systems and Retimers, facilitating the management of large datasets for AI tasks. Previously in August, the company launched Rally Anywhere, an on-premise version of its enterprise agility platform, that will allow businesses to plan, prioritize, manage, and track activities at every level in the organization.
On September 6, Daniel Newman, Futurum Group CEO appeared in an interview on Yahoo Finance where he talked about AVGO’s position in the AI race. He shares that the company’s AI business is performing well and AVGO owns the technology to solve some complicated networking use cases. Newman shares that AVGO is priced well and has the conditions to rotate back over the next few quarters,
Overall, Broadcom Inc. (NASDAQ:AVGO) is leading the race for AI infrastructure and holds promise for the future. In the fourth quarter of 2024, Broadcom expects revenue from AI to grow by 10% sequentially reaching $3.5 billion, bringing the full-year total to $12 billion.
4. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 156
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the most promising technology stocks according to hedge funds. The semiconductor company makes chips for technology giants like NVIDIA and AMD.
In September, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) logged $7.82 billion (NT$251.87 billion) in revenue, an increase of 40% year-over-year. On October 14, Reuters reported that the company is expected to report a 40% increase in revenue in FQ3 2024, due to soaring demand for AI and AI products. Analysts polled by Reuters expect third-quarter revenue to reach $9.27 billion.
TMSC expects to spend $40 billion to $32 billion in capital expenditure in 2024. Of this, 70% to 80% of the budget will be allocated to advanced process technologies, nearly 20% will be directed to specialty technologies, and 10% will be spent on advanced packaging, testing, and mass-making.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is expanding its presence across the world, especially in Europe. The company recently formed a joint venture with major partners, in Dresden, Germany. The joint venture will position TMSC as a leader in the foundry industry.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) expects revenue from AI chips to increase at a compound annual growth rate (CAGR) of 50% by 2027, making it one of the most promising technology stocks according to hedge funds.
Diamond Hill Capital stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2024 investor letter:
“On an individual holdings’ basis, top contributors to return in Q2 included our long positions in Alphabet, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and Microsoft. Semiconductor manufacturer Taiwan Semiconductor’s (TSMC) fundamentals remain solid as demand for its chips continues growing — particularly as the machine learning and cloud computing trends gain more traction.”
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA), also referred to as the AI star, is one of the most promising technology stocks according to hedge funds. The chip maker is also a provider of cloud services and gaming products.
The company is rapidly growing and garnering attention from across the globe. Recently the company closed a deal with Salesforce and also launched a new AI tool to meet the needs of the next generation of mobiles, robots, autonomous vehicles, and 5G. On October 8, NVIDIA Corporation (NASDAQ:NVDA) partnered with TSMC to push the limits for the next generation of advanced semiconductor chips using Nvidia’s computational lithography platform.
NVIDIA Corporation (NASDAQ:NVDA) is expected to generate $32.5 billion in revenue during the fiscal third quarter of 2024. This revenue is likely to come from its rapidly growing Hopper architecture and its new and improved Blackwell Chips. By the end of this year, the company is also expected to ramp up production for the chips.
On October 14, Ben Reitzes, Melius Research’s head of technology research, appeared in an interview on CNBC where he discussed his outlook on NVDA. He suggests that there is a lot of upside near the company’s growth estimates and revenue, quite less than any other stock. According to him, NVDA will be trading at one time its P/E to growth ratio in 2025, which is highly attractive for a name as influential as NVDA. He adds that the demand for its Blackwell chips is huge and the company will have to ramp up production.
There is no denying that NVIDIA Corporation (NASDAQ:NVDA) has a crucial role to play in the artificial intelligence industry, which explains why 179 hedge funds were bullish on the stock at the close of Q2 2024.
Ithaka Group’s Ithaka US Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) is the market leader in visual computing through the production of high-performance graphics processing units (GPUs). The company targets four large and growing markets: Gaming, Professional Visualization, Data Center, and Automotive. NVIDIA’s products have the potential to lead and disrupt some of the most exciting areas of computing, including: data center acceleration, artifi cial intelligence (AI), machine learning, and autonomous driving. The reason for the stock’s appreciation in the quarter was twofold: First, the stock benefi ted from tremendous excitement surrounding the further development of generative AI and the likelihood this would necessitate the purchase of a large number of Nvidia’s products far into the future; Second, Nvidia posted another strong beat[1]and-raise quarter, where the company upped its F2Q25 revenue guidance above Street estimates, showcasing its dominant position in the buildout of today’s accelerated computing infrastructure.”
2. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Holders: 219
Meta Platforms Inc (NASDAQ:META) is a technology conglomerate and is the company behind Facebook, Instagram, Threads, and WhatsApp. As of today, the company has a large user base of over 3.27 billion daily active users across all its platforms.
Meta Platforms Inc (NASDAQ:META) is a promising technology stock and we say that because of its advanced technological inventions. Over the past few months, the company has launched AI tools and features and in September launched its debut AR glasses, Orion. On the same day, the company revealed its most affordable mixed-reality headset, Meta Quest 36.
On the AI front, Meta Platforms Inc (NASDAQ:META) is making strides to become the best recommendation technology company through its social media platforms. On October 4, the company launched new features, helping young adults explore their interests and find new people easily. In addition to that, the company also released, “Imagine Yourself,” an AI tool that users can now access in their feeds and stories.
Overall, Meta Platforms Inc (NASDAQ:META) has a sustainable business model and owns superior technology, making it difficult for competitors to take precedence. Its platforms are deeply integrated into the lives of users and the inclusion of AI and tech inventions make it a powerful force.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is a well-known technology company behind the commonly used Microsoft Suite. The company also develops cloud products and personal computing products.
Microsoft Corporation (NASDAQ:MSFT) is pouring capital into artificial intelligence. Over the past few months, the company has closed deals with startups and technology companies to run their workloads on Microsoft Azure, its cloud platform. A few days ago, the company made an addition to its list of partnerships by signing an agreement with Rezolve AI, a startup revolutionizing the online retail landscape.
In addition to that, Microsoft Corporation (NASDAQ:MSFT) along with other crucial stakeholders made a $100 billion deal to improve the functioning of data centers and artificial intelligence. The company has also been making strategic investments in AI and data in other countries.
Chad Morganlander, Washington Crossing Advisors’ Senior Portfolio Manager and Co-Founder, appeared on Yahoo Finance on April 27, emphasizing the importance of MSFT. He shares that MSFT is one of the highest-quality stocks an investor can own. He adds that with its dividend-paying history and investments in AI, the company is likely to experience lower earnings volatility.
Microsoft Corporation (NASDAQ:MSFT) is a long-standing company with immensely strong fundamentals. This coupled with its investments in AI and data make it one of the most promising stocks according to hedge funds.
Fred Alger Management’s Alger Spectra Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is a beneficiary of corporate America’s transformative digitization. The company operates through three segments: Productivity and Business Processes (Office, LinkedIn, and Dynamics), Intelligent Cloud (Server Products and Cloud Services, Azure, and Enterprise Services), and More Personal Computing (Windows, Devices, Gaming, and Search). During the quarter, shares contributed to performance after the company reported strong fiscal third quarter results, underscoring its leadership position in the cloud and highlighted its role as a primary facilitator and beneficiary of AI adoption. Company revenue growth, operating margin, and earnings growth surpassed consensus expectations. The utility scale Azure cloud business grew 31% in constant currency of which 7% was AI related versus 3% two quarters ago. Further, management noted most of the AI revenue continues to stem from inference rather than training indicating high quality AI applications by Microsoft’s clients. Management also indicated that the significant cost-cutting programs in corporate America are done, suggesting that the cost optimization headwinds previously impacting Azure’s growth are over. Separately, management provided color on their new AI-productivity tool, Copilot, noting that approximately 60% of Fortune 500 companies are already using Copilot, and that the quarter witnessed a 50% increase in Copilot assistance integration within Teams. We continue to believe that Microsoft has the potential to hold a leading position in AI, given its innovative approach and demonstrated high unit volume growth opportunity.”
Overall, MSFT ranks first among the 10 promising tech stocks according to hedge funds. While we acknowledge the potential of cloud and technology companies, 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 MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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