On January 1, King Lip, BakerAvenue Wealth Management’s chief strategist and partner, joined CNBC’s ‘Closing Bell’ to discuss market outlooks as we enter 2025. His focus was on the impressive performance of tech stocks in 2024, with expectations for a second consecutive year of double-digit gains. Lip was against the prevailing sentiment among investors that big tech has peaked and that funds should rotate into smaller stocks or other themes. He argued that the recent weakness in the tech sector is largely due to technical rebalancing rather than a fundamental downturn. He emphasized that cash is likely to flow back into leading tech stocks, as they are projected to deliver the highest earnings growth in 2025, with an anticipated earnings increase of over 20%.
Discussing high valuations in the tech sector, particularly for large-cap stocks trading at forward earnings multiples between 32 and 35 times, Lip countered that many valuations remain within one standard deviation of their historical norms over the past decade. He pointed out that the MAG7 have consistently provided strong returns and are well-positioned for future growth. Lip identified Broadcom as a top stock, praising its management under Hock Tan and its unique role in the market as a provider of custom AI chips. He noted that the company operates at a lower earnings multiple while benefiting from substantial growth.
Lip also discussed Palantir, which has garnered attention for its profitability and positive cash flow since becoming profitable two years ago; despite its high valuation exceeding 50 times revenue, he believes it is well-positioned to benefit from government spending cuts and AI initiatives. While acknowledging concerns about insider selling and high valuations for the company, Lip remains optimistic about its future potential, suggesting it could be more appealing if it drops to the mid-$60 range.
Lip is bullish on tech stocks in 2025 that will be driven by strong earnings growth and ongoing investments in AI infrastructure. The NASDAQ 100 index has performed remarkably well, achieving a return of 27% in 2024 following a staggering 53.8% return in 2023. This reflects a broader trend where major tech companies have outperformed traditional indices significantly, and with that being acknowledged, we’re here with a list of the 12 best technology stocks to invest in for the long term.
Stock market data on a laptop screen. Photo by Alesia Kozik
Methodology
To identify the best long-term tech stocks according to media, we sifted through financial media reports and watched Wall Street analysts’ appearances on the news. We compiled a preliminary list of 25 stocks first and then selected 12 stocks that were the most popular among elite hedge funds. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
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).
12 Best Technology Stocks to Invest In for the Long Term
12. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 107
Advanced Micro Devices Inc. (NASDAQ:AMD) is a semiconductor company that develops cutting-edge processors and graphics chips for applications like data centers, gaming, and embedded systems. Its core focus lies in creating high-performance computing solutions designed to power the demands of AI.
The company is a leader in chiplets, which are smaller, specialized chips that are interconnected to form a larger, more complex system-on-a-chip (SoC). Chiplet architecture accelerates development by allowing for independent design and manufacturing of individual components. It results in higher yields and reduces the risk of costly manufacturing defects associated with monolithic chips. Its chiplet technology is superior with yield rates exceeding 80%, surpassing Intel’s 60%.
Scott Bauer from Prosper Trading Academy believes Advanced Micro Devices Inc.’s (NASDAQ:AMD) growth lies in the data center segment, due to a demand for its Instinct GPUs and EPYC CPUs, which cloud providers and enterprises are increasingly adopting. The segment’s revenue increased 122% to a record $3.5 billion in Q3 2024. The advancement in chiplet technology underpins the success of its high-performance data center products and positions AMD for long-term success.
11. Salesforce Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 116
Salesforce Inc. (NYSE:CRM) provides customer relationship management (CRM) technology that helps businesses manage customer interactions. In October 2024, it introduced Agentforce. This is an AI-powered platform for digital labor, which uses autonomous AI agents to enhance human capabilities.
In the third fiscal quarter of 2025, the company secured over 200 Agentforce deals. Several leading organizations, including FedEx, Adecco, Accenture, ACE Hardware, IBM, and RBC Wealth Management, are building their digital labor forces on the Salesforce Inc. (NYSE:CRM) platform, using Agentforce.
The company expects Agentforce to deflect 25-50% of cases, with potential for higher rates. It’s aggressively expanding its sales team, adding 1,400 Account Executives. Salesforce Inc. (NYSE:CRM) is prioritizing responsible AI and aims to lead the enterprise AI platform market.
Constellation Research’s Ray Wang recently emphasized the importance of software companies that use AI to serve customers who lack the expertise to develop their own AI solutions. Still, concerns are there as analyst Gil Luria warns of modest near-term AI revenue impact due to pricing concerns and the company’s scale. It raised its FQ4 2025 revenue guidance to $9.9-$10.10 billion, representing a growth of nearly 8%.
Salesforce’s growing AI integration, however, remains a key long-term driver. Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q2 2024 investor letter:
“In a tough backdrop for software companies, shares of Salesforce, Inc. (NYSE:CRM) cratered after the company reported quarterly results that surprised to the downside due to a tougher spending environment. The company reported revenue growth that missed on expectations, while also lowering its outlook for revenue growth, due to a more measured buying environment from its customers. Salesforce experienced elongated sales cycles, deal compression and elevated budget scrutiny, which pushed some deals to following quarters. Taking a step back, the company’s evolving AI story should not be overlooked as it is integrated across the company’s sprawling suite of cloud and digital assets.”
10. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 123
Adobe Inc. (NASDAQ:ADBE) is a software company known for its creative, marketing, and document management solutions. Some of its widespread tools include Photoshop, Illustrator, InDesign, Acrobat, and Premiere Pro, which millions of individuals and professionals use globally.
In 2024, it launched several AI models, including Firefly, which features cutting-edge image, vector, design, and video generation tools. These AI-powered features are integrated into core applications like Photoshop, Premiere Pro, and Acrobat. AI-powered creativity contributed to a record revenue of $21.51 billion in FY2024, representing an 11% year-over-year growth.
Still, the company’s stock fell recently due to the 2025 revenue forecast of $23.3-$23.55 billion, which was below analysts’ consensus of $23.77 billion. This was fueled by investor concerns that its investments in AI-powered software applications may not yield immediate returns. The company didn’t clearly explain how it planned to monetize its new AI tools.
However, Brent Thill recently pointed out Adobe Inc.’s (NASDAQ:ADBE) growth potential based on the anticipated Firefly AI monetization. Therefore, continued investments in AI innovation position the company for continued success.
Polen Focus Growth Strategy also increased its holdings in Adobe Inc. (NASDAQ:ADBE), anticipating renewed revenue growth driven partly by monetizing its GenAI product, Firefly. Here’s what it stated regarding the company in its Q3 2024 investor letter:
“We added to several existing positions in the quarter including Adobe Inc. (NASDAQ:ADBE), Workday, Shopify, MSCI, and Paycom Software. We feel Adobe is poised for re-accelerating revenue and earnings growth partially due to the monetization of its Firefly GenAI product embedded in its creative software.”
9. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 128
Broadcom Inc. (NASDAQ:AVGO) provides semiconductor solutions and specializes in the design and development of application-specific integrated circuits (ASICs). It serves a range of markets, including data centers, networking, software, broadband, storage, and wireless. It has 3nm AI ASIC chip deals with Alphabet and Meta along with other tech giants aiming for AI hyperscaling.
For FY2024, revenue for the company reached a record $51.6 billion. AI alone generated $12.2 billion in revenue, a 220% surge year-over-year, representing 41% of semiconductor revenue. This was due to the demand for custom AI accelerators (XPUs) and AI networking solutions. In FQ4 2024, AI revenue reached $3.7 billion, representing 150% growth, driven by a doubling of AI XPU shipments to three hyperscale customers and 4x growth in AI connectivity revenue.
The company’s AI semiconductor revenue is expected to outpace non-AI semiconductor revenue in the coming years. Three hyperscalers are developing their own multi-generational AI XPU roadmaps, with each planning to deploy 1 million XPU clusters across a single fabric by 2027. This presents a significant Serviceable Addressable Market for XPUs and networking, estimated to be between $60-$90 billion by 2027. Broadcom Inc. (NASDAQ:AVGO) is on track for volume shipments of its next-generation 3-nanometer XPUs to hyperscale customers in H2 FY2025, solidifying its leadership position.
The company’s strong earnings and strategic positioning in the AI revolution make it a compelling long-term investment according to Columbia Threadneedle Global Technology Growth Strategy. It stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q3 2024 investor letter:
“Similar to the earnings results for Nvidia, shares of Broadcom Inc. (NASDAQ:AVGO) initially sold off after the company reported solid earnings that fell light of elevated market expectations, but the stock did recover from its drawdown in the matter of a few weeks. With an enticing combination of custom chip offerings as well as networking assets, Broadcom remains one of the best positioned companies as part of the AI revolution. Broadcom outlined a path to derive a majority of its revenue from the AI end market within a couple of years, and the non-AI part of the business has stabilized after a deep correction. The company’s dominant market position in its end markets, along with durable growth, strong margins and best-in-class capital allocation, presents an opportunity to compound capital over time.”
8. Uber Technologies Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 136
Uber Technologies Inc. (NYSE:UBER) is a technology company that operates a global platform connecting consumers with service providers. It operates across 3 core segments: Mobility, Delivery, and Freight. It provides consumers with flexible and cost-effective transportation options, eliminating the need for personal vehicle ownership.
Its platform has evolved beyond traditional ride-hailing to Uber Eats, Uber Freight, and Uber Shopping, which collectively generate $20 billion in annual gross bookings. The company’s gross bookings were up 20% year-on-year in Q3 2024. This was driven by an increase in user frequency, evidenced by the 70% year-on-year growth in Uber One members, which now exceeds 25 million. Uber One is a paid membership program for discounts on rides and deliveries through the Uber and Uber Eats apps.
It has market dominance in major urban centers, such as its ~30% market share in New York City and ~40% in London. However, its growth trajectory is now shifting towards suburban and secondary cities, due to a surge in demand and those regions are expanding at 20-25% annually, outpacing the 10-15% growth observed in core urban areas. Uber Technologies Inc. (NYSE:UBER) has the potential to maintain its position as a leader in the mobility market.
The RiverPark Large Growth Fund broke down Uber Technologies, Inc. (NYSE:UBER)’s impressive market reach in the fund’s Q4 2023 investor letter:
“Uber Technologies, Inc. (NYSE:UBER): UBER was a top contributor in the quarter following better than expected 3Q23 earnings and 4Q23 guidance. Gross bookings of $35.3 billion were up 21% year over year. Mobility gross bookings of $17.9 billion grew 30% over last year driven by a combination of product innovation and driver availability. Delivery gross bookings of $16 billion were up 16% from last year and continued to be strong throughout the quarter. 1Q Adjusted EBITDA of $1.1 billion, up $576 million year over year, was better than management’s guidance of $1 billion, and the company generated $900 million of free cash flow, up from $358 million last year. Management guided to continuing growth in 4Q Gross Bookings (23.5% growth) and Adjusted EBITDA (of $1.2 billion).
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.1 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 a ride sharing and food delivery service; we also see it as a global mobility platform with 142 million users (by comparison, Amazon Prime has 200 million members) and the ability to penetrate new markets of on-demand services, such as package and grocery delivery, travel, and hourly worker staffing. Given its $5.2 billion of unrestricted cash and $5.1 billion of investments, the company today has an enterprise value of $128 billion, indicating that UBER trades at 21x our estimates of next year’s free cash flow.”
7. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a technology company known for its consumer electronics, including the iPhone, iPad, Mac computers, Apple Watches, and AirPods. It has a loyal customer base, and its subscription services, including Apple Music and Apple TV+, are experiencing significant growth.
While China has historically been a significant market for the company, it experienced a 7.7% year-over-year sales decline in FY24. India, on the other hand, achieved record revenue in FQ4 2024. Despite headwinds, its strong brand loyalty and continuous innovation efforts position it well for long-term growth.
Apple’s Services revenue reached an all-time high of $25 billion in FQ4 2024, a 12% year-over-year increase, particularly attributed to the App Store. This diversification lessens its dependence on hardware sales. Still, the launch of the iPhone 16, with its AI-powered features, is anticipated to fuel significant demand. Analysts project 90 million units of the iPhone 16 to be sold in 2025.
Mar Vista Strategic Growth Strategy viewed AAPL stock positively due to investor enthusiasm for its AI roadmap and iPhone 16 launch. Here’s what is said regarding Apple Inc. (NASDAQ:AAPL) in its Q3 2024 investor letter:
“Apple Inc. (NASDAQ:AAPL) stock was strong in the quarter as investors viewed the company’s generative AI roadmap and iPhone 16 product cycle positively. The market was reminded of the strength of the Apple ecosystem as management demonstrated how generative AI solutions would be integrated into its iOS 18 operating system, which was broadly released in the iPhone 16 late in calendar Q3. We believe Apple’s generative AI-enabled products should spur a meaningful iPhone upgrade cycle and create new avenues of monetization through its app store and advertising offerings. We believe this will support intrinsic value growth that will range between high single digits and low double-digits over our investment horizon.”
6. Taiwan Semiconductor (NYSE:TSM)
Number of Hedge Fund Holders: 158
Taiwan Semiconductor (NYSE:TSM) is a chipmaker that supplies chips to leading tech companies like Apple, NVIDIA, Qualcomm, and AMD. With its advanced 2nm technology and leadership in 3nm, 5nm, and 7nm chip production, it maintains its dominance in the semiconductor industry, especially in AI and high-performance computing.
The company holds over 60% of the market share. This, together with the current industry supply constraints, gives it pricing power. It reported a 39% year-over-year revenue increase in Q3 2024 which was attributed to the rising demand for AI-related hardware. Its advanced manufacturing capabilities, including its CoWoS packaging technology crucial for AI chips, position it at the forefront of semiconductor innovation.
ClearBridge All Cap Growth Strategy recently added Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) to its portfolio, recognizing its role as the leading foundry for major chipmakers. It stated the following regarding in its Q3 2024 investor letter:
“While the Strategy continues to have a significant position in Nvidia, we are underweight semiconductors versus the benchmark. We added to our semiconductor positioning during the quarter with the purchase of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). TSM, an out-of-benchmark name, is the world’s fabrication production provider of choice. The criticality and sophistication of its manufacturing footprint powers all of the leading edge fabless global semiconductor companies, including Apple, Nvidia, Qualcomm, AMD and Broadcom. While AI has driven upside in data centers, PCs and handsets are at cycle lows, positioning half of the company’s business for a recovery.”
5. NVIDIA Corp. (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corp. (NASDAQ:NVDA) is a global leader in GPU manufacturing and is currently powering the AI revolution. Initially known for gaming, its GPUs now power data centers, robotics, and autonomous vehicles.
The Blackwell architecture, led by the flagship GB200 GPU, represents a significant technological advancement for the company. Strong demand for Blackwell and Hopper platforms has fueled data center growth, with H200 GPU sales reaching double-digit billions. In Q3 2024, it achieved record revenue of $35.1 billion, a 94% year-over-year increase. The data center segment surged 112% to $30.8 billion.
Its GPU revenue surged 67% annually over the past 3 years. While concerns exist about AI spending fluctuations by Big Tech, the rapid advancement of AI models necessitates increasing computing power. For instance, Meta’s Llama model required a 10x increase in computing power between versions 3 and 4. NVIDIA Corp. (NASDAQ:NVDA), with a 90% market share, is the primary supplier of this computing power. Its strong market position, innovative technology, and impressive financial performance position it as a highly promising stock.
Manole Capital Management highlighted that NVIDIA Corporation (NASDAQ:NVDA) more than tripled in value over the past year, driven by strong AI-related demand and continued revenue growth that exceeds market expectations. It stated the following in its Q3 2024 investor letter:
“As of this publication, Nvidia is up roughly 150% year-to-date. NVIDIA Corporation (NASDAQ:NVDA) was the largest gainer in the S&P 500 last year and has more than tripled in value over the last year. It hit an eye-opening market capitalization of $3 trillion in June, less than four months after it eclipsed the $2 trillion mark. Enthusiasm for everything AI-related, especially for the primary chip maker whose products are essential to powering AI technology, continues to fuel the market. Last quarter, and for the fifth consecutive quarter, Nvidia reported sales and profits that blew past Wall Street expectations. The stock rose +37% in the second quarter alone.”
4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 202
Alphabet Inc. (NASDAQ:GOOGL) is a technology company with a diverse portfolio that includes Google Search, Maps, YouTube, Cloud, and Waymo. In Q3 2024, its performance was driven by increased demand for search and cloud services that were fueled by AI advancements.
Google Search maintains a 90% global market share and generated over 74% of the company’s revenue in the third quarter. The company’s continued investment in AI, exemplified by Gemini and its integration across products, positions it for long-term growth. By Q3 2024, all products with over 2 billion monthly users used Gemini models. The CEO emphasized that AI solutions are driving deeper product adoption among existing customers, attracting new clients, and securing larger contracts.
Investments in AI are seen as one of the factors that have resulted in substantial free cash flow into Google’s core search advertising business, which has reached $55.8 billion over the past 12 months. Analysts remain bullish on its future, acknowledging its effective navigation of the evolving AI landscape.
Qualivian Investment Partners highlighted the company’s strong second-quarter results, driven by core business growth, despite YouTube ad deceleration. While AI investments are significant, there’s confidence in its long-term growth potential. Here’s what it said regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q3 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOGL): Q2 2024 revenues and EPS beat expectations, with total revenues growing 14%, Search ad revenues growing 14%, YouTube ads growing 13%, and Google Cloud revenues growing 29%. Revenue growth in the quarter constituted a continued sequential improvement from earlier quarters in the year, suggesting a continued rebound in Alphabet’s core business except for YouTube ad revenues, which missed expectations and showed deceleration in the growth rate as compared to Q1 when it grew 21%. Operating margins improved by 310 bps vs. the same quarter last year.
Management continued to highlight developments with their generative AI program, which is seen as a foundational platform with opportunities across their businesses but particularly in search and cloud. However, this comes with material capex investment well ahead of the expected economic benefits from Gen AI, and the level of spending is leading investors to worry about the ROI on that spend for Alphabet, as well as the other hyperscalers (Microsoft and Amazon). We continue to have confidence in Alphabet’s ability to generate strong revenue, earnings, and cash flow growth well above the S&P 500’s in the years to come and view it as a core holding for the long term.”
3. Meta Platforms Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 235
Meta Platforms Inc. (NASDAQ:META) is a technology company that runs Facebook, Instagram, Threads, and WhatsApp, with over 3 billion daily active users. It’s integrating AI across its platforms to enhance user experience.
In 2024, the company’s stock rallied by 72%, driven by AI, leading to increased engagement and driving advertising revenue. Its Llama AI model, with over 500 million monthly active users, positions it as a leader in GenAI. Its Andromeda machine learning model and Advantage+ platform are improving ad targeting and increasing advertiser return on investment. Andromeda is the company’s AI system for intelligently selecting which ads to show to each user. Whereas Advantage+ includes AI-powered tools that automate ad campaign management for better results.
Citi analysts, led by Ronald Josey, are bullish on Meta Platforms Inc.’s (NASDAQ:META) prospects, citing its strong product cycle and AI-driven growth initiatives. Appaloosa Management, a prominent hedge fund, has held a significant stake in Meta Platforms Inc. (NASDAQ:META) for several years, reflecting strong investor confidence in the company’s long-term growth potential.
Hardman Johnston Global Equity initiated a new position in Meta Platforms, Inc. (NASDAQ:META), citing improved investment efficiency, strong AI-driven growth prospects, and a more proactive approach to user safety, reversing their previous bearish stance. It stated the following regarding the company in its Q3 2024 investor letter:
“During the quarter, we initiated one new position in Meta Platforms, Inc. (NASDAQ:META) and had no liquidations. Management at Meta has effectively addressed concerns about investment efficiency by shifting resources from Reality Labs towards broader AI initiatives with a clearer path to profitability. We believe management has successfully articulated the benefits of this strategy, highlighting how AI is driving user engagement and advertiser productivity. This, in turn, fuels continued revenue momentum and increases the likelihood of positive earnings surprises in the future. Additionally, the parent company of the social media platform, Facebook, has recently taken positive steps to enhance safety, which suggests to us a shift towards a more proactive and responsive approach to addressing important potential challenges and concerns. Weak oversight over data privacy protection was a key reason why we sold the position in the portfolio back in 2021. Removing this governance overhang allows us to feel comfortable to enter back into the stock at a time when we believe it is poised for strong earnings growth going forward.”
2. Microsoft Corp. (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corp. (NASDAQ:MSFT) is a technology company that has recently expanded its AI capabilities with the launch of enhanced AI models in its Azure AI model catalog, catering to several industry needs. This strategic move is paying off, as evidenced by a strong FQ1 2025 performance.
Its cloud computing platform, Azure, seamlessly integrates on-premises and cloud-based systems for enterprise clients. The company reported a 16% year-over-year revenue growth, reaching $65.6 billion in FQ1 2025. Cloud revenue surged 22% to exceed $38.9 billion, driven by a 23% increase in Azure-led server products and cloud services. Azure Arc’s customer base surpassed 39,000 across various industries, reflecting over 80% year-over-year growth. Azure Arc is a hybrid cloud management platform that extends the capabilities of Azure to non-Azure environments.
The company’s AI business is anticipated to achieve an annual revenue run rate of $10 billion in the next quarter, the fastest growth in its history. Microsoft Corp. (NASDAQ:MSFT) has also partnered with Accenture and Avanade to assist businesses in using GenAI and Copilot tools to transform their operations. This collaboration is expected to drive significant financial growth for the company.
RiverPark Large Growth Fund noted the company’s near-term Azure growth headwinds due to infrastructure limitations but remains confident in its long-term growth prospects. It stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q3 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT): MSFT was a top detractor in the third quarter following a fiscal fourth quarter earnings report that featured inline operating metrics but mixed guidance. Positively, the company reported strong revenue (+15%) and earnings growth (+10%), powered by Azure (+30%), and operating margins of 43%. Guidance however calls for lower than expected fiscal first quarter Azure revenue as infrastructure constraints limit growth, and higher capital expenditures throughout the company’s fiscal 2025 to alleviate these constraints. The company expects growth to reaccelerate in the back half of fiscal 2025 as more AI capacity comes online.
Cloud-based services have become the company’s largest revenue and earnings producer. The company’s Azure platform alone has the potential to grow to more than $200 billion in annual revenue over the next decade. Overall, we believe that the company will continue to deliver double-digit revenue and EPS growth and generate an enormous amount of 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 a technology company that evolved from an online bookstore into a diversified conglomerate. Its core businesses include e-commerce with an online marketplace, along with cloud computing through Amazon Web Services (AWS). It also offers digital streaming services and has expanded into areas like AI, advertising, and physical retail.
During Q3 2024, AWS led the charge in profitability, contributing $10.4 billion to the company’s total operating income of $17.4 billion. Its cloud offerings are improved through customer-centric initiatives. A recent example is the launch of the Oracle Database@AWS service, which enables customers to migrate their Oracle workloads to AWS infrastructure with minimal modifications.
AWS dominates AI due to its unrivaled computing power, essential for training large models. Its user-friendly AI platform and scalable infrastructure, coupled with high switching costs, make it the preferred choice for businesses over managing their own AI infrastructure. The total cloud market is expected to grow from $700 billion in 2024 to ~$2,400 billion in 2032, which positions AWS for further growth.
Montaka Global Investments increased its holdings in Amazon.com Inc. (NASDAQ:AMZN) due to a near -20% stock price decline, believing it offers more upside potential than other holdings like AMD and KD. Here’s what the company’s Q3 2024 investor letter stated:
“Secondly, in August, we sold some of our holdings in two tactical positions in the tail of Montaka’s portfolio – Advanced Micro Devices (AMD) and Kyndryl Holdings (KD) – to take advantage of a near-20% drawdown in the stock price of Amazon.com, Inc. (NASDAQ:AMZN).
We still see plenty of upside in AMD and KD, but Amazon has more substantial and higher-probability upside that demanded we allocate even more of Montaka’s capital to the online retailer.
Investment opportunities always compete for capital. Through this lens, Montaka’s largest investments act as a kind of ‘benchmark’: Any new investment must be more attractive than these holdings to get included in our portfolio.
Because we believe Montaka’s largest investments remain so attractive, our annualized portfolio turnover has been low for many years now – typically around 25%.
We continually identify quality global businesses with upside potential – but few new investment opportunities have greater upside than Montaka’s existing portfolio investments.
While Montaka is focused on investing over the long term, and most days don’t require any action on our part, paradoxically we need to be agile on a daily basis. That is, we must be ready to act if stock price changes throw up attractive investment opportunities.”
As we acknowledge the growth potential of Amazon.com Inc. (NASDAQ:AMZN), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. 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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