In this article, we will take a detailed look at the 12 Best Tech Stocks To Buy According to Billionaire Ken Griffin. For a quick overview of 5 such stocks, read our article 5 Best Tech Stocks To Buy According to Billionaire Ken Griffin.
Markets are off to a slow start in 2024 as investors go into a wait and see mode regarding the Fed’s plan of action for possible rate cuts this year. While the NASDAQ slid in the first few days of the year and some circles are voicing skepticism over the Magnificent Seven’s ability to carry forward the gains seen in 2023, long-term analysts believe technology stocks have more room to run in 2024. Part of the reason why many notable analysts are bullish on the technology sector is the power of AI and generative AI software’s benefits for common people.
Why Did Tech Stocks Decline in the Start of 2024?
Josh Brown, CEO at Ritholtz Wealth Management, recently talked on CNBC about the reason behind the decline in tech stocks in the first week of 2024. Brown said that there is a lot of profit-taking activity going on right now as investors saw remarkable returns from the technology sector in 2023, especially in the fourth quarter of the year. Brown said that as a wealth manager he can totally understand the logic of taking profits early in the year especially after such a spectacular rally. Brown, however, emphasized that the decline in tech stocks might look like these companies are “stumbling” but that is not the case.
Josh Brown also said that 2024 is the year when AI goes from “concept to product.” While he is not totally happy with their valuations, Alphabet and Amazon are the top two tech stocks to own according to Brown because of their AI catalysts.
Wise investors know that a decline in stocks for a week or two or even a few months for that matter means nothing when seen in the long run. Tech companies working on products and services that impact millions of people around the world with strong balance sheets are expected to keep gaining momentum in the months and years to come. That’s why many analysts and money managers are piling into these stocks.
In this backdrop, we decided to take a look at some of the top technology stock picks of billionaire Ken Griffin.
Ken Griffin of Citadel Investment Group
Methodology
For this article we scanned Ken Griffin‘s hedge fund Citadel LLC’s 13F portfolio for the third quarter of 2023 and picked the fund’s top 12 technology stock picks. Some notable names in the list include NVIDIA Corp (NASDAQ:NVDA), Microsoft Corp (NASDAQ:MSFT) and Apple Inc (NASDAQ:AAPL).
12. Uber Technologies Inc (NYSE:UBER)
Ken Griffin’s Stake: $319M
Ken Griffin’s Citadel decreased its stake in ride-sharing platform company Uber Technologies Inc (NYSE:UBER) by 11% in the third quarter. The fund still owns a $319 million stake in Uber Technologies Inc (NYSE:UBER).
Citi analyst Ronald Josey added Uber Technologies Inc (NYSE:UBER) to his top picks for 2024. Here is what the analyst said about these companies:
“Underlying these themes are companies that, in our view, are stronger than they were a year ago. Most have gone through cost reductions and optimizations themselves resulting in sustainable margin expansion and stronger overall balance sheets.”
RiverPark Advisors made the following comment about Uber Technologies, Inc. (NYSE:UBER) in its Q3 2023 investor letter:
“Uber Technologies, Inc. (NYSE:UBER): UBER was the top contributor in the quarter following a better-than-expected 2Q23 earnings report and 3Q23 guidance. Gross bookings of $33.6 billion were up 16% year over year. Mobility gross bookings of $17 billion grew 25% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $16 billion were up 12% from last year. 2Q Adjusted EBITDA of $916 million, up $552 million year over year, significantly beat Street estimates of $845 million and the company generated $1.1 billion of free cash flow. Management guided to continuing growth in 3Q Gross Bookings (17%-20% growth) and Adjusted EBITDA (of $975-1,025 million).
UBER remains the undisputed global leader in ride sharing, with a greater than 50% share in every major region in which it operates. The company is also a leader in food delivery, where it is number one or two in the more than 25 countries in which it operates. Moreover, after a history of losses, the company is now profitable, delivering expanding margins and substantial free cash flow. We view UBER as more than just ride sharing and food delivery, but also as a global mobility platform with the ability to sell to its 130 million users (by comparison, Amazon Prime has 200 million members) and penetrate new markets of on-demand services, such as package and grocery delivery, travel, and worker staffing for shift work. Given its $4.3 billion of unrestricted cash and $4.4 billion of investments, the company’s enterprise value of $95 billion equates to just over 20x next year’s estimated free cash flow.”
11. AT&T Inc. (NYSE:T)
Ken Griffin’s Stake: $319M
AT&T Inc. (NYSE:T) Inc. ranks 11th in our list of the best tech stocks to buy according to billionaire Ken Griffin. Griffin’s fund increased its stake in AT&T Inc. (NYSE:T) by 182% in the third quarter, ending the quarter with a $319 million stake in AT&T Inc. (NYSE:T).
As of the end of the third quarter of 2023, 52 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in AT&T Inc. (NYSE:T).
Miller Value Income Strategy made the following comment about AT&T Inc. (NYSE:T) in its Q3 2023 investor letter:
“Our third-largest holding at quarter end was AT&T Inc. (NYSE:T), a leading provider of communications and connectivity services in the US. At $15/share, the stock trades at the same price it did almost thirty years ago. The share price is much less interesting to us in relation to where it has traded in the past than in relation to how much cash the company generates and what management is doing with it. At just over 6x earnings, the stock trades near its lowest price-to-earnings (P/E) multiple ever, also representing close to its largest-ever P/E discount to the stock market. The business converts most of its earnings to free cash flow, implying a forward free cash flow yield north of 15%. Just under half of free cash flow is going toward the dividend (7.5% yield), while much of the balance is going to debt paydown. In other words, if the stock does not fall below its lowest-ever valuation, investors clip a rock-solid 7.5% in cash, while owning a growing portion of a very steady business as management reduces debt outstanding. A discounted cash flow model will suggest that intrinsic value for shares begins with a “2,” suggesting the stock is undervalued on an absolute basis. The lack of volatility in the underlying fundamentals also makes it unique when compared to many other things we own, which reduces the probability of permanent capital impairment and argues for a significant weight in the portfolio.
AT&T looks particularly attractive when compared to some of the larger names dominating the S&P 500. Compare the stock to Apple, for instance, whose revenues and profits are likely to shrink this year, even as it trades at 29x this year’s earnings estimate. The ongoing return to rationality and capital accountability, along with extreme valuations in the megacap tech stocks, have us more excited about our portfolio’s prospects than we can remember for quite some time. As always, we remain the largest investors and welcome any questions or comments.”
10. Meta Platforms Inc (NASDAQ:META)
Ken Griffin’s Stake: $324M
Even though Ken Griffin’s hedge fund cut its stake in social media platform company Meta Platforms Inc (NASDAQ:META) by a whopping 53% in the third quarter, the fund still ended the period with a $324 million stake in Meta Platforms Inc (NASDAQ:META).
Overall, Meta Platforms Inc (NASDAQ:META) is enjoying a bullish view from analysts and hedge funds since Meta Platforms Inc (NASDAQ:META) successfully executed cost cutting and integrated AI in its products that led to huge usage growth.
Like Meta, hedge funds are also buying NVIDIA Corp (NASDAQ:NVDA), Microsoft Corp (NASDAQ:MSFT) and Apple Inc (NASDAQ:AAPL).
Blue Tower Asset Management made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q3 2023 investor letter:
“On February 24, 2023, Meta Platforms, Inc. (NASDAQ:META) released Llama, their LLM project, with the code being open-source but the training weights being kept proprietary. Nonetheless, within a week the training weights were leaked for the project. This release of the weights for 65 billion parameter model was a huge gift for open-source programmers to begin experimenting upon. Within weeks, other developers were creating innovations building on the model. There has been a race towards developing low-budget fine-tuning projects that can be trained for specific applications at the cost of a few hundred dollars in some cases. Some of these LLM projects can even be run on individual computers rather than data centers.
After the voluntary release of Llama’s architecture as open-source, the leak of the model weights ended up being a blessing in disguise for Meta. The innovation and improvements that followed were all built on Meta’s AI codebase. They were able to get these innovations without needing to pay any of the open-source developers for their efforts. This also demonstrates that the business advantage of the large tech companies is not in their models or AI codebase. Any innovations that the companies develop are unlikely to stay within the walls of the companies due to the mobility of researchers being poached between companies by recruiters. However, as these new model improvement technologies are made, the big tech companies have a scale advantage. They will be able to employ it into models that have more data, more compute budget, more parameters and therefore more intelligence in the resulting neural net.”
9. Dell Technologies Inc (NYSE:DELL)
Ken Griffin’s Stake: $355M
Dell Technologies Inc (NYSE:DELL) ranks 9th in our list of the best tech stocks to buy according to billionaire Ken Griffin. Citadel sold 818,057 shares of Dell Technologies Inc (NYSE:DELL) during the third quarter. But the fund still owns a $355 million stake in Dell Technologies Inc (NYSE:DELL).
Recently, Citi opened a 90-day catalyst watch on Dell Technologies (NYSE:DELL) and HP (NYSE:HPQ) amid a bullish outlook of demand in the PC market.
8. Booking Holdings Inc (NASDAQ:BKNG)
Ken Griffin’s Stake: $399M
Ken Griffin’s hedge fund bought 122,566 more Booking Holdings Inc (NASDAQ:BKNG) shares during the third quarter, increasing its stake in the travel platform company to $399 million. The company is one of the best tech stocks to buy according to Ken Griffin.
As of the end of the third quarter of 2023, 81 hedge funds out of the 910 funds tracked by Insider Monkey had stakes in Booking Holdings Inc (NASDAQ:BKNG). The biggest hedge fund stakeholder of Booking Holdings Inc (NASDAQ:BKNG) was Ken Fisher’s Fisher Asset Management which owns a $1.1 billion stake in Booking Holdings Inc (NASDAQ:BKNG).
In November, Booking Holdings Inc (NASDAQ:BKNG) posted Q3 results. Adjusted EPS in the period came in at $72.32, beating estimates by $4.40. Revenue in the quarter increased by about 21.3% year over year to $7.34 billion, beating estimates by $80 million.
L1 Capital International Fund made the following comment about Booking Holdings Inc. (NASDAQ:BKNG) in its Q3 2023 investor letter:
“Following significant under-performance, some high-quality businesses in these sectors are now becoming more attractive from a valuation perspective – in our language they are now getting warmer on our Bench of potential investments.
Our ‘all-weather’ portfolio centred around our unique definition of ‘quality’ delivered strong performance in the September quarter. Three companies positively contributed over 0.5% (in Australian dollars) to the Fund’s returns for the quarter (Booking Holdings Inc. (NASDAQ:BKNG), Intuit and Natural Resource Partners, in alphabetical order), and another three companies almost reached this level of positive contribution. No companies detracted from the Portfolio’s returns by 0.5% or more.
As part of our travels during the quarter (see page 6) we had the opportunity to meet with management of both Booking Holdings and Intuit. We continue to view both companies as exceptionally well managed.
Booking Holdings, the world’s leading online travel agency, continues to benefit from a strong global travel environment with particular strength in Europe, Booking Holdings’ core market. Fears of peak ‘revenge travel’ following COVID-19 lockdowns have been misplaced in our view. We assess current travel volumes to be only slightly elevated compared to pre-COVID-19 trends, with some regions, particularly outbound travel from China, still relatively depressed. Anyone who has travelled anywhere recently will be nodding when we say hotel rates have increased meaningfully in recent times. Accommodation providers are generally doing quite well, but the increased hotel rates have been necessary to offset inflation in costs such as employee salaries and additional cleaning services. As Booking Holdings ‘clips the ticket’ of accommodation spend, the company has benefitted from increased average daily hotel rates. Importantly, Booking Holdings continues to invest in its business, improving the reach, quality and range of services it provides, resulting in gains in market share and an extension of its industry leadership position. Booking Holdings is now more fairly valued by the market, but still provides attractive base case risk-adjusted returns and remains one of the larger investments in the Fund.”
7. Micron Technology Inc (NASDAQ:MU)
Ken Griffin’s Stake: $552M
Micron Technology Inc (NASDAQ:MU) is one of the best technology stocks to buy according to billionaire Ken Griffin. UBS recently called Micron Technology Inc (NASDAQ:MU) one of its top semiconductor picks for 2024.
“Even after this rally into year-end, we would remain overweight semis in 2024 as inventory has peaked and started converting to revenue,” UBS’s Timothy Arcuri said.
6. Palo Alto Networks Inc (NASDAQ:PANW)
Ken Griffin’s Stake: $563M
Cybersec company Palo Alto Networks Inc (NASDAQ:PANW) ranks 6th in our list of the best tech stocks to buy according to billionaire Ken Griffin. Citadel had a $563 million stake in Palo Alto Networks Inc (NASDAQ:PANW) as of the end of September.
Recently, Raymond James downgraded Palo Alto Networks Inc (NASDAQ:PANW) stock to Market Perform from Outperform amid valuation concerns.
“To be clear, Palo Alto Networks is a great company, technology leader, execution has been stellar, and [Raymond James] doesn’t fight investors that have a time horizon longer than its 12-month mandate. However, [Raymond James] believes the risk/reward in the stock is becoming less favorable,” Raymond James said.
TimesSquare Capital U.S. Mid Cap Growth Strategy made the following comment about Palo Alto Networks, Inc. (NASDAQ:PANW) in its Q3 2023 investor letter:
“Across the Information Technology universe, we seek companies possessing differentiated capabilities, products, and services. Palo Alto Networks, Inc. (NASDAQ:PANW) supplies network and cloud-based security solutions to enterprises, service providers, and government entities. The latest quarter was mixed with the company falling shy versus the Street on billings, in line for revenues, and outpacing earnings. Palo Alto’s updated guidance was materially ahead of lowered Street expectations. Nevertheless, its shares pulled back by -8%.”
Like NVIDIA Corp (NASDAQ:NVDA), Microsoft Corp (NASDAQ:MSFT) and Apple Inc (NASDAQ:AAPL), Palo Alto is one of the stocks hedge funds are buying.
Click to continue reading and see 5 Best Tech Stocks To Buy According to Billionaire Ken Griffin.
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Disclosure. None. 12 Best Tech Stocks To Buy According to Billionaire Ken Griffin was initially published on Insider Monkey.
