In the first week of February, the market experienced little changes as investors analyzed earnings reports from big tech companies, a better-than-anticipated January jobs report, and updates regarding President Trump’s tariff policies. According to Josh Schafer, Yahoo Finance Markets team, the S&P 500 remained almost unchanged for the week, while the Nasdaq Composite and Dow Jones Industrial Average decreased 0.4%.
Schafer noted that over 62% of S&P 500 companies are done reporting their earnings and the year-over-year growth rate for the index keeps rising. As of February 7, the S&P 500 was on track for earnings growth of 16.4% compared to the previous year. This exceeds the 11.8% earnings growth analysts had projected at the start of January and it would also mark the fastest pace of growth rate in three years.
READ ALSO: 10 Best Stocks to Buy and Hold For 2025 and 10 Best Low Priced Technology Stocks To Buy Now.
The January jobs report, released on Friday, February 7, highlighted resilience in the labor market with an unexpected fall in the unemployment rate and higher-than-expected wage growth. Additionally, December’s monthly job gains saw an upward revision that showed the US labor market ended the year 2024 in a better position than previously reported. This led economists to argue that the Federal Reserve will not be cutting interest rates in the near future. As a result, this puts more pressure on inflation data to cool down before the central bank considers reducing borrowing costs.
The Consumer Price Index (CPI) is set to be released in the second week of February on the morning of Wednesday. Investors are also expected to be paying close attention to President Trump’s planned announcement of new 25% tariffs on steel and aluminum imports and for additional details on reciprocal duties across the board.
With this background in mind, let’s take a look at 10 unrivaled stocks of the next 5 years.
Stocks
Methodology
To compile our list of the 10 unrivaled stocks of the next 5 years, we sifted through our own rankings, financial media reports, ETFs, and various online resources. We used search phrases like “unrivaled stocks” and “wide moat stocks” to compile a list of the best unrivaled stocks. From an initial list of over 25 stocks, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 10 unrivaled stocks of the next 5 years were then ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2024.
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 Unrivaled Stocks of the Next 5 Years
10. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 87
Intuit Inc. (NASDAQ:INTU) is an American multinational business software and financial technology company. The company’s products include TurboTax, an application for tax preparation, Credit Karma, a credit monitoring and personal accounting service, QuickBooks, an accounting program for small businesses, and Mailchimp, an email marketing platform. Intuit Inc. (NASDAQ:INTU) has a leading market position in key financial software categories like tax preparation and small business accounting. INTU ranks among the top 10 unrivaled stocks of the next 5 years.
On February 6, KeyBanc Capital Markets reiterated an “Overweight” rating with a price target of $800 for Intuit Inc. (NASDAQ:INTU). Alex Markgraff, KeyBanc’s analyst, provided insights from a recent tax survey that was collected in January. Conducted with 1,000 consumers about filing plans for 2025, the survey results were mostly positive, but some weren’t as great as anticipated.
The survey indicated that TurboTax is retaining its customers and market share. Additionally, there was an increase in the number of customers using TurboTax Live, although the increase was smaller than anticipated. Markgraff had discussions with Intuit Inc.’s (NASDAQ:INTU) management, which revealed a strong confidence in Consumer Group growth guidance for the fiscal year 2025. The growth forecast expects a 7-8% increase year-over-year. KeyBanc has a positive outlook on Intuit Inc. (NASDAQ:INTU) and is keeping its expectations for the Consumer Group higher than the other Wall Street analysts.
9. PayPal Holdings Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 90
PayPal Holdings Inc. (NASDAQ:PYPL) is an American multinational financial technology company that operates an online payments system and offers digital payments to merchants and consumers. The company offers online payments solutions in the majority of countries that support online money transfers. PayPal Holdings Inc. (NASDAQ:PYPL) is revolutionizing digital money transfers through its unique offerings and a two-sided network that connects millions of users to make effortless online and in-person transactions by connecting their bank accounts and credit cards to the PayPal account. As one of the top unrivaled stocks of the next 5 years, PayPal Holdings Inc. (NASDAQ:PYPL) has a leadership position in payments and commerce.
The company is strategically focused on growth initiatives like enhanced mobile checkout experiences to capture a significant portion of the e-commerce market. In 2024, PayPal Holdings Inc. (NASDAQ:PYPL) launched new branded checkout experiences, rolled out PayPal Everywhere, introduced Fastlane, and expanded PayPal Complete Payments. With PayPal Complete Payments, the company is building an end-to-end suite of solutions that solves more small business needs. In Q4 2024, PayPal Holdings Inc. (NASDAQ:PYPL) reported strong adoption with 45% of SMB processing and checkout volume now on PayPal Complete Payments. Additionally, in the quarter, the company focused on selling Fastlane to major brands that can drive future volume growth.
In September 2024, PayPal Holdings Inc. (NASDAQ:PYPL) launched PayPal Everywhere which is driving significant growth in debit card adoption and opening new categories of spend. As a result, the company added more than 1.5 million first-time PayPal debit card users in Q4 2024 and debit card total payment volume (TPV) was up nearly 100% in the quarter. PayPal Holdings Inc. (NASDAQ:PYPL) plans to expand PayPal Everywhere to several European markets in 2025.
8. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 123
Adobe Inc. (NASDAQ:ADBE) is an American computer software company that develops and provides a range of creative software applications. The company’s products, services, and solutions allow individual creators, small businesses, and global enterprises to create, edit, and publish digital content across various media formats like graphics, photography, video, and web design. Adobe Inc. (NASDAQ:ADBE) is a leading company in the digital creative industry and ranks among the top unrivaled stocks of the next 5 years.
The company is currently focused on integrating AI and machine learning features across its applications to improve productivity and enhance the user experience. Adobe Inc. (NASDAQ:ADBE) has introduced a number of generative AI models in Adobe Firefly, which are considered a game changer in the creative process. Additionally, on January 22, Adobe Inc. (NASDAQ:ADBE) introduced new innovations in Adobe Premiere Pro, After Effects, and Frame.io that are designed to streamline post-production and accelerate time savings for video pros. The new AI-powered tools will allow editors to quickly locate the perfect film clip by identifying objects, locations, camera angles, or metadata.
On February 4, Adobe Inc. (NASDAQ:ADBE) announced new generative AI features for Acrobat AI Assistant that simplify working with contracts. The new intelligent contract capabilities help customers understand complex terms and identify differences between multiple agreements so they can quickly and easily understand and verify the information in the documents.
7. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 158
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a Taiwanese company that designs and manufactures semiconductors. The company deploys distinct process technologies to manufacture products for various applications that cover a range of end markets including high-performance computing, smartphones, the Internet of Things (IoT), automotive, and digital consumer electronics. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) holds a significant market share in contract chip manufacturing and advanced chip manufacturing.
Wedgewood Partners, an investment management company, discussed Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q4 2024 investor letter. The letter noted that TSMC has maintained a near-monopoly in the fabrication of almost every new AI accelerator introduced in the market over the last couple of years. The investment management firm also noted that Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) continues to invest heavily to expand its capacity as the demand for accelerated computing is surging.
The company is focused on expanding its manufacturing footprint to address the rising demand for semiconductors. In 2024, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) began construction on a semiconductor fabrication plant in Dresden, Germany. The new facility will be designed for the production of TSMC’s 28/22 nanometer planar CMOS and 16/12 nanometer FinFET process technologies. With production expected to start in 2027, the Dresden facility will bring TSMC’s advanced manufacturing capabilities to more customers in Europe.
6. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 165
Visa Inc. (NYSE:V) is an American multinational payment card services corporation that operates a network of payment systems. As the world leader in digital payments, the company has a global footprint and a significant share of the market for credit and debit cards. It ranks among the top unrivaled stocks of the next 5 years.
Mar Vista Investment Partners, LLC, an investment management company, discussed Visa Inc. (NYSE:V) in its “Mar Vista Focus strategy” third quarter 2024 investor letter. The letter noted that Visa Inc. (NYSE:V) has a strong network that connects buyers and sellers globally and the company’s scale advantages prevent new competitors from easily disrupting the industry. The company directly benefits from the digitization of payments globally. While penetration rates and transaction volumes in developed markets may slow, the investment management firm expects that Visa Inc. (NYSE:V) will still manage to grow its revenue by 8-10% driven by growth in global consumer spending, the rise of electronic transactions, expansion into business-to-business transactions, and value-added services for clients.
The company’s leadership position is reflected in its strong financials with high operating margins of 68% and minimal capital expenditures at only 3-4% of sales. The investor letter also noted that Visa Inc. (NYSE:V) actively buys back its own stock and has reduced the number of outstanding shares by one-third over the last 15 years. Mar Vista Investment Partners, LLC believes that Visa Inc. (NYSE:V) will continue to repurchase 2-3% of shares outstanding annually.
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) is an American multinational technology company that designs and sells graphics processing units (GPUs), software, and other computing products. The company is a leader in artificial intelligence (AI) chips and is known for its powerful GPUs. NVDA has experienced some losses recently because of DeepSeek’s entry into the AI game. The Chinese start-up’s latest AI model is being seen as a game-changer that uses far less computational power and costs far less to develop but performs just as well as its US equivalents. NVIDIA Corporation’s (NASDAQ:NVDA) GPUs power AI infrastructure and there is concern that the demand for GPUs could suffer.
However, on February 6, Morgan Stanley analyst Joseph Moore reiterated that NVIDIA Corporation (NASDAQ:NVDA) remains a “top pick” with a price target of $152. While DeepSeek has created “some headwinds around export controls and longer-term investment,” Moore remains confident in NVDA’s ability to navigate these challenges. The near-term business is showing promise with strong demand for both Hopper and Blackwell AI chips. NVIDIA Corporation’s (NASDAQ:NVDA) data center customers remain committed to large-scale AI investments and the company is positioned well as the market prioritizes high-performance solutions.
4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 202
Alphabet Inc. (NASDAQ:GOOGL) is an American technology conglomerate and holding company that owns Google, YouTube, and other businesses. The company has a leading market position in online search and it continues to invest in areas like cloud computing and AI. GOOGL ranks among the top unrivaled stocks.
On February 5, Guggenheim analyst Michael Morris raised the price target on Alphabet Inc. (NASDAQ:GOOGL) to $220 from $215 and maintained a “Buy” rating following the company’s fourth-quarter earnings report. The analyst noted that while Alphabet Inc.’s (NASDAQ:GOOGL) search and YouTube segments performed better than expected, others did not meet expectations. The report pointed out that although this might affect the market sentiment, the expectation is that the company’s investments in AI infrastructure will lead to significant growth over time.
Interestingly, Alphabet Inc. (NASDAQ:GOOGL) plans to invest about $75 billion in capital expenditures in 2025, up from the consensus of $48 billion and Guggenheim’s estimate of $63 billion. As the AI race intensifies, Guggenheim expects investors to eventually favor companies that demonstrate clear returns on their AI investments. The firm’s analyst is confident that Alphabet Inc.’s (NASDAQ:GOOGL) near-term AI investments will yield attractive growth in the long run.
3. Meta Platforms Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 235
Meta Platforms Inc. (NASDAQ:META) is an American technology company that owns widely used social media platforms like Facebook, Instagram, and WhatsApp. The company’s social media platforms have a massive user base and this attracts advertisers from around the world. Additionally, Meta Platforms Inc. (NASDAQ:META) is investing in AI to enhance its products. META ranks among the top 3 on our list of the unrivaled stocks of the next 5 years.
The social media giant has been performing well and managed to impress both investors and analysts with its strong Q4 2024 results. On January 30, Benchmark analyst Mark Zgutowicz upgraded his rating on Meta Platforms Inc. (NASDAQ:META) to “Buy” from “Hold” and set a price target of $820 while citing the company’s strong core business outlook in 2025. He expects that Meta Platforms Inc.’s (NASDAQ:META) investments in AI infrastructure and strong advertising business will drive growth in 2025 and beyond.
Zgutowicz is particularly intrigued by the initial development of AI engineering agents by Meta Platforms Inc. (NASDAQ:META). These AI agents can code and solve problems like “a good mid-level engineer.” Zgutowicz anticipates further discussions on the potential efficiencies these agents could bring to Meta Platforms Inc.’s (NASDAQ:META) research and development efforts.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is a leading developer of computer software, operating systems, artificial intelligence (AI, and cloud computing. The company’s early investment in OpenAI has allowed it to enhance its cloud computing services (Azure) and position itself as a leader in the rapidly growing field of generative AI. Microsoft Corporation (NASDAQ:MSFT) ranks among the top unrivaled stocks of the next 5 years.
RiverPark Advisors, an investment advisory firm, discussed Microsoft Corporation (NASDAQ:MSFT) in its “RiverPark Large Growth Fund” third quarter 2024 investor letter. The letter noted that MSFT reported strong revenue and earnings growth in its fiscal fourth quarter of 2024, driven by Azure and operating margins. However, the guidance anticipated lower-than-expected Azure revenue in its fiscal first quarter of 2025 because of infrastructure constraints. Microsoft Corporation (NASDAQ:MSFT) expects to reaccelerate growth in the second half of fiscal 2025 as more AI capacity comes online.
The investor letter also noted that cloud-based services are now Microsoft Corporation’s (NASDAQ:MSFT) largest revenue and earnings-generating segment. RiverPark Advisors believes that the company’s Azure platform has the potential to grow to over $200 billion in annual revenue over the next decade. The investment advisory firm expects Microsoft Corporation (NASDAQ:MSFT) to continue to deliver double-digit revenue and EPS growth and generate substantial free cash flow to return to shareholders and use for acquisitions.
1. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com Inc. (NASDAQ:AMZN) is an American technology company that has a leading position in e-commerce and cloud computing through its Amazon Web Services (AWS) business. Amazon.com Inc. (NASDAQ:AMZN) ranks among the top unrivaled stocks to invest in according to hedge funds.
Fred Alger Management, an investment management company, discussed Amazon.com Inc. (NASDAQ:AMZN) in its “Alger Spectra Fund” fourth quarter 2024 investor letter. The letter noted that the company’s Amazon Web Services (AWS) division offers large-scale cloud solutions to help corporations with their digital transformation. During the quarter, AMZN’s stock performed well as the company reported better-than-expected Q3 2024 results, with revenues and earnings beating analyst estimates. Operating margins increased to 11%, supported by improved efficiency in logistics and strong performance from AWS. The investment management firm noted that AWS revenue growth accelerated during the quarter and achieved a record-high operating margin of 38.1%. This strong performance was driven by lower cloud cost optimizations, renewed workload migrations, and a rise in contributions from AI workloads.
The investor letter also pointed out that Amazon.com Inc.’s (NASDAQ:AMZN) management mentioned plans to increase capital expenditures to further enhance the company’s technology infrastructure to meet the growing demand for AI-driven computing.
Overall, AMZN ranks first among the 10 unrivaled stocks of the next 5 years. While we acknowledge the potential of these unrivaled stocks, our conviction lies in the belief that some 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 AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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