Growth stocks have been outperforming value stocks for quite a while. Over the last 5 years, the MSCI Growth index has gained 19.6% annually on average, while the MSCI Value index has shown average annual gains of 10.35%. Over the last 15 years, the MSCI Growth index has outperformed its value counterpart for 9 of those years. Even though high interest rates are usually more favorable for value stocks, the MSCI Growth index outperformed the value index by a huge margin. In 2023, the outperformance was mainly attributed to the unstoppable tech stocks that led the market toward a tremendous performance.
Market Broadening in 2024
While tech stocks dominated last year, several other sectors have caught up in 2024. The Utilities Select Sector SPDR Fund (NYSEArca:XLU), Financial Select Sector SPDR Fund (NYSEArca:XLF), Industrial Select Sector SPDR Fund (NYSEArca:XLI), and Energy Select Sector SPDR Fund (NYSEArca:XLE) are all nearly in-line with the S&P 500, which is nearly 12% higher, as of May 17. While the utilities sector is a relatively defensive one, analysts and experts are keeping quite a bullish outlook on the industry, mainly due to increasing demand for data centers as the AI trend continues.
On May 13, the global head of Private Wealth Management Capital Markets at Goldman Sachs, Sara Naison-Tarajano, told CNBC that the utilities sector could be the next beneficiary of artificial intelligence. This sentiment is shared by Dr. Ed Yardeni of Yardeni Research. For more details on it, go to 15 Stocks That Will 10x in 5 Years. Nevertheless, Sara Naison-Tarajano is bullish on technology stocks, especially the Magnificent 7. She said that, while these stocks are not as cheap, their earnings justify their high valuations. She added that these companies are fundamentally strong with robust balance sheets and hold large amounts of cash. However, Naison-Tarajano cautioned that these stocks shouldn’t be bought at highs as they “move around” a lot and her firm looks for optimal entry points.
Unstoppable Growth Stocks for Long-term
Along with being an unstoppable growth stock, Vertiv Holdings Co (NYSE:VRT) also holds a position in our best growth stocks for the next five years list. As of May 17, the company’s share price is up by over 112% year-to-date and has seen quite a lot of interest from institutional investors in the first quarter of 2024. In the quarter, 85 hedge funds had stakes in the company, compared to 75 in the fourth quarter of 2023. Andreas Halvorsen’s Viking Global and Paul Tudor Jones’s Tudor Investment Corp were some of the notable new shareholders of the company and initiated their position in the company with shares worth $83.14 million and $25.4 million, respectively.
On May 15, Bank of America raised its price target on Vertiv Holdings Co (NYSE:VRT) to $115 from $100 and maintained a Buy rating on the stock, as reported by The Fly. The price revision came after the company’s CEO Giordanno Albertazzi, CFO David Fallon, and VP Investor Relations, Lynne Maxeiner attended the BofA Transportation, Airlines, and Industrials Conference. BofA noted that stronger demand for AI is influencing its outlook and revised its 2025 adjusted EBITDA estimate upward for Vertiv Holdings Co (NYSE:VRT), citing expectations of stronger demand for artificial intelligence technologies. At its Q1 2024 earnings call, the CEO Giordanno Albertazzi made the following remarks:
“Vertiv has a complete power offering, the whole powertrain to serve the data center market. We are quite relevant in both the power distribution and power quality segments of the data center market. The acquisition of E&I expanded the Vertiv portfolio to include medium-voltage switchgear, low-voltage switchgear and busway offering.
We often get asked about capacity. We talked about liquid cooling in February. We want to spend a minute on power now. We are expanding our operational capacity significantly across the powertrain to support customer demand. A good example are busbars and switchgears. We have already doubled our capacity since we acquired E&I at the end of ’21, and we are on track to double it again by the end of ’25 to support the growth we see ahead.”
With that, let’s take a look at some of the most unstoppable growth stocks to buy now.
10 Unstoppable Growth Stocks To Buy
Our Methodology
For this article, we used the Finviz stock screener to identify 25 large to mega-cap growth stocks with year-to-date share price returns of over 40%, as of May 17. We narrowed down our list to 10 stocks with the highest year-to-date gains and listed our stocks in ascending order.
Hedge fund sentiment around each stock has also been added. The hedge fund data was taken from Insider Monkey’s database of 933 elite hedge funds as of the fourth quarter of 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
10 Unstoppable Growth Stocks To Buy
10. Meta Platforms, Inc. (NASDAQ:META)
Year-to-date Share Price Return as of May 17: 36.28%
Number of Hedge Fund Holders: 242
Meta Platforms, Inc. (NASDAQ:META) is one of the top tech companies in Silicon Valley. The company had 242 shareholders in the fourth quarter of 2023 with Rajiv Jain’s GQG Partners taking the top spot among them with 11.15 million shares worth nearly $4 billion. The firm has retained its position as the most significant shareholder in the first quarter of 2024 as well, increasing its position to 11.5 million shares worth $5.6 billion. As of May 17, Meta Platforms, Inc.’s (NASDAQ:META) share price is 36.28% higher year-to-date, making it the 10th stock on our list of unstoppable growth stocks.
As of May 17, 37 out of 42 analysts maintain a Buy-equivalent rating on Meta Platforms, Inc. (NASDAQ:META). Their average analyst price target of $522.95 shows a 12.55% upside from the current levels.
Patient Capital Management stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its first quarter 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) was a top contributor in the first quarter gaining another 37.5%. Performance has been supported by strong top and bottom-line growth as the company maintains its leadership in the advertising space, despite Reels still being under monetized versus Newsfeed and Stories. The company continues to return cash to shareholders, increasing their buyback program by another $50B in February (6.4% of shares outstanding), and announcing their first dividend of $0.50 per share (0.39% yield). The company trades at 25x this year’s earnings, which we do not view as too demanding for a company with some of the best AI assets, an improving topline that should lead to free cash flow outperformance and continued capital return.”
9. Robinhood Markets, Inc. (NASDAQ:HOOD)
Year-to-date Share Price Return as of May 17: 62.33%
Number of Hedge Fund Holders: 21
Robinhood Markets, Inc. (NASDAQ:HOOD) is a California-based company that runs a financial services platform through which its clients can make investments in stocks, ETFs, cryptocurrencies, and gold, among others. As of May 17, Robinhood Markets, Inc. (NASDAQ:HOOD) has gained 62.33% year-to-date.
On May 17, BofA analyst Craig Siegenthaler double-upgraded Robinhood Markets, Inc. (NASDAQ:HOOD) to Buy from Underperform and increased the price target to $24 from $14.
According to Insider Monkey’s database, 21 hedge funds held stakes in Robinhood Markets, Inc. (NASDAQ:HOOD) in Q4 of 2023, with positions worth $1.115 billion. With 34.9 million shares of the company, valued at $445.087 million, Catherine D. Wood’s ARK Investment Management is the top investor of the company, as of December 31, 2023.
8. Pure Storage, Inc. (NYSE:PSTG)
Year-to-date Share Price Return as of May 17: 69.87%
Number of Hedge Fund Holders: 37
Pure Storage, Inc. (NYSE:PSTG) is a California-based company that provides data storage and management technologies, products, and services.
Pure Storage, Inc. (NYSE:PSTG) is 69.87% higher year-to-date, as of May 17. It is eighth on our list of unstoppable growth stocks to buy., Additionally, Pure Storage, Inc.’s (NYSE:PSTG) sales have witnessed a growth of 16.38% over the past five years.
Pure Storage, Inc. (NYSE:PSTG) was part of 37 hedge funds’ portfolios in the fourth quarter of 2023 with a total stake value of $926.236 million. Atreides Management is the most significant shareholder in the company and has a position worth $195.923 million as of Q4 of 2023.
7. Tencent Music Entertainment Group (NYSE:TME)
Year-to-date Share Price Return as of May 17: 76.63%
Number of Hedge Fund Holders: 23
Tencent Music Entertainment Group (NYSE:TME) offers online music entertainment platforms through which it provides music streaming, live streaming services, and more in the People’s Republic of China. In Q4 of 2023, 23 hedge funds held stakes in Tencent Music Entertainment Group (NYSE:TME), with positions worth $357.217 million. Marshall Wace LLP is the biggest shareholder in the company. The firm has increased its stake in the company by 957% to 10.451 million shares worth $94.167 million, as of the fourth quarter of 2023.
On May 14, Benchmark raised the price target on Tencent Music to $19 from $14 and maintained a Buy rating on the shares.
As of May 17, Tencent Music Entertainment Group’s (NYSE:TME) share price has increased by 76.63% year-to-date. On May 13, Tencent Music Entertainment Group (NYSE:TME) reported first-quarter earnings. The non-GAAP earning per depositary share (EPADS) reported was $0.15, which topped the analysts’ estimates by $0.01. The revenue climbed 3.4% year-over-year to $937 million and beat the estimates by $26.97 million.
6. Sea Limited (NYSE:SE)
Year-to-date Share Price Return as of May 17: 91.83%
Number of Hedge Fund Holders: 51
Sea Limited (NYSE:SE), previously known as Garena Interactive Holding Limited, is a Singapore-based company that runs digital entertainment, e-commerce, and digital financial service businesses. As of May 17, the stock has gained 91.83% year-to-date.
On May 14, Sea Limited (NYSE:SE) announced Q1 earnings. The GAAP EPS reported was -$0.04. Meanwhile, the revenue of $3.73 billion jumped 22.7% year-over-year, which beat the estimates by $110 million.
In the fourth quarter of 2023, 51 hedge funds had stakes in Sea Limited (NYSE:SE), with total positions worth $2.17 billion. As of the fourth quarter of 2023, Tiger Global Management LLC is the most prominent shareholder in the company with a stake worth $580 million.
Lakehouse Capital stated the following regarding Sea Limited (NYSE:SE) in its fourth quarter 2023 investor letter:
“Meanwhile, the largest detractor was Sea Limited (NYSE:SE) (-17.1%), which sold off following the release of its quarterly results where earnings came in below expectations. For our part, while a headline drop in profitability can appear worrying, we aren’t overly concerned as it was merely a function of management’s intentional decision to increase investment towards e-commerce to drive growth. As the broader Southeast Asian e-commerce market recovers from some post pandemic headwinds and their primary competitor TikTok is entangled in a regulatory setback in Indonesia, we agree with management that now is the time to be aggressive and pivot back to growth mode and consolidate market share.”
5. NVIDIA Corporation (NASDAQ:NVDA)
Year-to-date Share Price Return as of May 17: 91.99%
Number of Hedge Fund Holders: 173
NVIDIA Corporation (NASDAQ:NVDA) is engaged in designing and manufacturing computer graphics processors, chipsets, and related multimedia software. In Q4 of 2023, 173 hedge funds held positions in NVIDIA Corporation (NASDAQ:NVDA) and their stakes amounted to $33.76 billion. GQG Partners is the most significant shareholder in the company and has a position worth $6.9 billion, as of December 31, 2023.
NVIDIA Corporation (NASDAQ:NVDA) has a consensus Strong Buy rating among 42 analysts, and its average price target of $1,035.84 has an upside of 12.01% to the last price of $924.79. The stock is up by 91.99% year-to-date, as of May 17, and is one of the unstoppable growth stocks to buy.
Patient Capital Management stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its first quarter 2024 investor letter:
“This quarter we entered two new positions, while exiting four positions. Our first new position was NVIDIA Corporation (NASDAQ:NVDA), which we bought early in the quarter. Nvidia is the market leader in designing and selling Graphics Processing Units (GPU), which has recently benefited from the insatiable demand of artificial intelligence (AI) models. The company currently captures 92% market share of data center GPUs and grew revenue, earnings and FCF an astounding 126%, 392%, and 610%, respectively, over the last year. While much of the focus is on Nvidia’s market cap reaching $2.3T, up 230% over the last year, the company’s valuation has actually come down over that period. As of 3/31/23, consensus was valuing the company at 61x forward EPS. This compares to today, where the company is being valued at 37x. While yes, we have never seen a company expand their market cap by so much so quickly, we have also never seen a company grow their fundamental earnings and cash generation so quickly (and which is actually expanding faster than valuation). While competitors are working to enter the GPU space, Nvidia has created a moat around their GPUs with their CUDA software offering. While we do expect the large cloud players to continue to move into the market, we think NVDA can continue to demand top market share. With leading edge technology, an increasing innovation cycle and strong cash generation, the company is well positioned for the increased adoption of accelerated computing and artificial intelligence (AI).
Nvidia Corp. (NVDA) was a top performer in the quarter gaining 82.5% in the period. While the company has had an impressive run, gaining 242% over the last year, the valuation has been supported by the impressive growth in Revenue (126%), EPS (392%) and free cash flow (610%) over the last year. The company has solidified its position in the GPU space supported by its proprietary software CUDA. While we expect competition to increase, we think NVDA can continue to maintain top market share. With leading edge technology, an increasing innovation cycle and strong cash generation, the company is well positioned for the increased adoption of artificial intelligence (AI).”
4. Vertiv Holdings Co (NYSE:VRT)
Year-to-date Share Price Return as of May 17: 112.12%
Number of Hedge Fund Holders: 75
Vertiv Holdings Co (NYSE:VRT) is involved in designing, manufacturing, and servicing critical digital infrastructure technologies and life cycle services. The stock is up by 112.12% year-to-date, as of May 17.
On May 15, BofA raised the price target on Vertiv Holdings Co (NYSE:VRT) to $115 from $100 and kept a Buy rating on the shares.
In the fourth quarter of 2023, 75 hedge funds had investments in Vertiv Holdings Co (NYSE:VRT), with positions worth $3.1 billion. As of December 31, 2023, Coatue Management is the largest shareholder in the company. The firm increased its stake in the company by 20% to 13.8 million shares worth $663.383 million.
Artisan Partners stated the following regarding Vertiv Holdings Co (NYSE:VRT) in its first quarter 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in DoorDash, GoDaddy and Vertiv Holdings Co (NYSE:VRT). Vertiv is an industrial power equipment company primarily serving the data center market with a global supply chain in cooling, power, controls and services. Rising AI-driven GPU use in data centers has spiked the need for efficient thermal management solutions, an area where Vertiv is particularly strong. Cooling, which consumes ~25% of data center energy, is a significant, recurring operational cost. We believe Vertiv is well positioned to benefit from a multiyear profit cycle in data center construction activity and a mix shift toward GPU-based data centers (which consume 2X–3X more power).”
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3. AppLovin Corporation (NASDAQ:APP)
Year-to-date Share Price Return as of May 17: 112.71%
Number of Hedge Fund Holders: 38
AppLovin Corporation (NASDAQ:APP) offers an advertisement platform to advertisers for the improvement of their marketing and monetization strategies. The company’s main platform offerings include AppDiscovery, SafeDK, and MAX. AppLovin Corporation (NASDAQ:APP) was held by 38 hedge funds in the fourth quarter of 2023 and the stakes amounted to $1.91 billion. GQG Partners is the most dominant shareholder of the company and has a position worth $1.02 billion as of Q4 of 2023.
As of May 17, the stock is 112.71% higher on a year-to-date basis. The company is among the most unstoppable growth stocks to buy on our list.
On May 8, AppLovin Corporation (NASDAQ:APP) announced Q1 earnings. The GAAP EPS was $0.67, which beat the market consensus by $0.12. The revenue topped the estimates by $85.3 million at $1.06 billion and grew 48.2% year-over-year.
SaltLight Capital stated the following regarding AppLovin Corporation (NASDAQ:APP) in its fourth quarter 2023 investor letter:
“AppLovin Corporation (NASDAQ:APP) operates at the intersection of game advertisers, publishers, and over one billion game players, functioning as a pivotal monetisation enabler in the free-to-play gaming ecosystem.
One of AppLovin’s strengths lies in its primary use of contextual data for ad matching. While this type of data may not offer the high precision of first-party data like Meta’s, it remains invaluable, especially in environments where traditional data signals are weaker. Contextual targeting becomes increasingly relevant in areas like connected TV (CTV), where direct user tracking is more challenging.
Connected TV, which includes devices (smart TVs, consoles, or sticks) that stream TV content, represents a flourishing opportunity set for performance-based digital advertising. As more households move away from traditional satellite or terrestrial TV in favour of internet-connected devices, the potential for monetising this viewership grows. However, advertising on CTV is still operating in the same seventy-year-old way as linear TV – with brand advertising as the dominant part of the funnel…” (Click here to read the full text)
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2. MicroStrategy Incorporated (NASDAQ:MSTR)
Year-to-date Share Price Return as of May 17: 131.26%
Number of Hedge Fund Holders: 16
MicroStrategy Incorporated (NASDAQ:MSTR) is a Virginia-based company that offers artificial intelligence-powered enterprise analytics software and services. MicroStrategy Incorporated (NASDAQ:MSTR) has a consensus rating of Strong Buy as per the 4 Wall Street analysts who have covered it over the past three months. As of May 17, the average price target of $1,678.75 implies an upside of 5.95% from the last price of $1,584.50.
As of May 17, MicroStrategy Incorporated’s (NASDAQ:MSTR) share price increased 131.26% year-to-date. Additionally, the company’s EPS has grown 68.04% in the last five years. Moreover, in the fourth quarter of 2023, 16 hedge funds had stakes in the stock with total positions worth $66.929 million.
Miller Value Partners stated the following regarding MicroStrategy Incorporated (NASDAQ:MSTR) in its first quarter 2024 investor letter:
“MicroStrategy Incorporated (NASDAQ:MSTR) 0.75% 12/15/2025 was the top contributor during the quarter. Bitcoin performed very strongly in the quarter, gaining 68.9% in the period, while also posting a new all-time high of $73.8K. After ending 2023 with 190K bitcoin, MicroStrategy purchased another 24.2K bitcoin subsequent to reporting 4Q23 results, pushing the company’s holdings to 214.2K bitcoin as of 3/18/24.”
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1. Super Micro Computer, Inc. (NASDAQ:SMCI)
Year-to-date Share Price Return as of May 17: 211.05%
Number of Hedge Fund Holders: 40
Super Micro Computer, Inc. (NASDAQ:SMCI) is a California-based developer and manufacturer of high-performance server and storage solutions established on modular and open architecture. The company tops our list of unstoppable growth stocks to buy as its share price grew by 211.05% year-to-date, as of May 17.
On May 1, Barclays raised the price target on Super Micro Computer, Inc. (NASDAQ:SMCI) to $1,000 from $961 and kept an Overweight rating on the shares.
Super Micro Computer, Inc. (NASDAQ:SMCI) was part of 40 funds’ portfolios and the total stake value was $642.911 million in the fourth quarter of 2023. With 446,128 shares worth $126.816 million, Driehaus Capital is the most prominent shareholder in the company, as of December 31, 2023.
ClearBridge Investments stated the following regarding Super Micro Computer, Inc. (NASDAQ:SMCI) in its first quarter 2024 investor letter:
“While large cap benchmarks get a lot of attention for a handful of mega cap stocks driving the lion’s share of performance, we would highlight even more extreme and unprecedented concentration in small cap benchmarks. Year to date, one stock, Super Micro Computer, Inc. (NASDAQ:SMCI) has driven 37% of the return of the benchmark.
Currently, SMCI is the largest constituent by weight in our benchmark, and it peaked at over 4.5%, representing the largest individual security weight in a monthly dataset going back to 1985. That represented a weighting 83% higher than the second-largest weight (from 1999). Moreover, MicroStrategy at its peak this past quarter would have represented the fourth-largest security in the 38 years of the monthly dataset. We are hard-pressed to recall another instance where the largest constituent of our benchmark was also added to the S&P 500, as SMCI was this March. We would note that SMCI currently is a $61 billion market capitalization company and MicroStrategy boasts a market capitalization of $28 billion, both well above the $6.8 billion weighted average market cap of the Strategy.
Enthusiasm for AI and bitcoin have fueled this atypical concentration and performance distortion. Bitcoin rallied fast and furiously following the SEC’s approval of the first bitcoin ETF in early January, while the AI infrastructure build-out has had a narrow set of beneficiaries. Against this backdrop, the ClearBridge Small Cap Growth Strategy underperformed its benchmark. We are disappointed by this result, although 79% of the relative underperformance was due to not owning these two large benchmark holdings, which have fundamental and governance factors that have caused us, as long-term investors focused on quality sustainable growth stories, to avoid them.”
If you are looking for an AI stock that is as promising as Microsoft but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
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