Kevin Mahn, President & CIO at Hennion & Walsh Asset Management, recently appeared on CNBC on January 6 to discuss the current market momentum and emphasize the need for investors to be selective in 2025 to find growth opportunities. He highlighted that while the MAG7 have led the market recently, their leadership may not continue. Mahn referenced historical data, noting that since 1950, there have been nine instances where the market rallied by 20% or more, with the market rising in eight of those cases. However, he pointed out that gains in the following year averaged only 3.6%, indicating a need for careful selection. He also acknowledged recent market trends, including a decline in the S&P 500’s performance and a potential shift in investor sentiment following events like the Santa Claus Rally.
He predicted a path of lower interest rates, expecting 50 basis points of cuts this year instead of the previously anticipated 100 basis points. Mahn suggested that this environment would create favorable conditions for stocks and bonds but urged investors to diversify beyond mega-cap tech stocks into sectors like biotech and aerospace. Earlier on January 3 as well, Mahn noted that after two consecutive years of gains, a third year of strong performance appears unlikely. He remarked that it seems the Grinch got in the way of the Santa Claus rally this year.
He also addressed concerns from investors tempted to time the market or sell their holdings. He warned against trying to time the market, describing it as often futile. Instead, he advocated for rebalancing portfolios to align with long-term goals and risk tolerance. He suggested that the economic landscape is changing, with lower interest rates and stagnant economic growth expected moving forward. Mahn advised investors to take profits from sectors that previously led the market and consider reallocating those funds into different areas poised for future growth. He highlighted biotech as a promising sector, noting bipartisan agreement on the need to lower drug prices. This shift could lead large-cap pharmaceutical companies to seek new revenue sources, making smaller biotech firms attractive.
Considering Mahn’s stance on the year ahead, we’re here with a list of the 15 best growth stocks to buy for the next 5 years.
Methodology
We first sifted through online rankings, and internet lists to compile a list of the top growth stocks to buy for the next 5 years. We then selected the stocks with high 5-year revenue growth and high analysts’ upside potential. From those we picked 15 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 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).
15 Best Growth Stocks to Buy for the Next 5 Years
15. Corcept Therapeutics Incorporated (NASDAQ:CORT)
Number of Hedge Fund Holders: 20
5-Year Revenue CAGR: 17.10%
Upside Potential as of January 15: 43.69%
Corcept Therapeutics Incorporated (NASDAQ:CORT) is a biopharmaceutical company that develops and commercializes therapies that adjust the effects of cortisol. Cortisol is a hormone that regulates various bodily functions. The company’s flagship product, Korlym, is FDA-approved for treating Cushing’s syndrome, which is a disorder caused by excessive cortisol production.
In Q3 2024, the company reported a revenue of $146.8 million, recording a 39% increase year-over-year. This growth is driven by increased physician awareness of hypercortisolism and a growing number of patients receiving treatment with Korlym. This momentum is further fueled by its next-generation drug candidate called relacorilant. Relacorilant is a selective cortisol regulator that has demonstrated promising results in two pivotal Phase 3 trials (GRACE and GRADIENT) for Cushing’s syndrome.
In the GRACE trial, patients treated with relacorilant were 6 times more likely to maintain blood pressure control compared to the control group. In the GRADIENT trial, patients receiving relacorilant experienced a statistically significant improvement in systolic blood pressure of 6.6 millimeters of mercury compared to the control group. Importantly, the drug was well-tolerated in both trials with no instances of hypokalemia, endometrial hypertrophy, adrenal insufficiency, or QT prolongation. All of these are serious side effects associated with the existing Cushing’s treatments.
Corcept Therapeutics Incorporated’s (NASDAQ:CORT) stock climbed in the third quarter due to strong Korlym sales and positive investor sentiment surrounding relacorilant. It’s expected to receive FDA approval in 2025. ClearBridge Small Cap Strategy stated the following regarding the company in its Q3 2024 investor letter:
“Another top contributor in health care, Corcept Therapeutics Incorporated (NASDAQ:CORT), saw its stock rise in the third quarter after strong earnings results and increased guidance for sales of Korlym, a hyperglycemia drug for adults with Cushing’s syndrome, which investors had been concerned would be vulnerable to the launch of a competitor’s generic version late last year. The company has seen added tailwinds from anticipation surrounding its next-generation version of the drug, which has fewer side effects, and is expected to release phase 3 data later this year and potentially file for FDA approval in 2025.”
14. ADMA Biologics Inc. (NASDAQ:ADMA)
Number of Hedge Fund Holders: 25
5-Year Revenue CAGR: 78.09%
Upside Potential as of January 15: 50.06%
ADMA Biologics Inc. (NASDAQ:ADMA) is a biopharmaceutical company that develops and commercializes specialty plasma-derived biologics. These are medicines created from human plasma that target specific medical conditions. Using its expertise in immunology, the company has brought three products to the market, providing innovative treatments for patients with infectious diseases and compromised immune systems.
The company achieved a revenue of $119.8 million in Q3 2024, a 78% year-over-year increase, driven by its commercialization efforts. This translated to a net income of $35.9 million, a substantial 1,300% surge compared to the year-ago period. These results led the company to raise its full-year guidance for revenue and net income. Mizuho Securities analyst Anthony Petrone recently maintained a Buy rating on ADMA Biologics Inc. (NASDAQ:ADMA), citing these earnings.
This growth is driven by ASCENIV, which is a treatment for primary immunodeficiency (PI) patients. The company has adjusted its production schedule to boost ASCENIV output for accelerated earnings growth. To support this trajectory, it has implemented several initiatives, including donor retention programs to enhance high-titer plasma collections and partnerships with third-party plasma collectors. ADMA Biologics Inc. (NASDAQ:ADMA) forecasts significant revenue opportunities for ASCENIV, projecting it to become a billion-dollar product by the 2030s.
13. Monolithic Power Systems Inc. (NASDAQ:MPWR)
Number of Hedge Fund Holders: 38
5-Year Revenue CAGR: 27.11%
Upside Potential as of January 15: 47.48%
Monolithic Power Systems Inc. (NASDAQ:MPWR) designs and develops semiconductor-based power solutions for various electronic devices. It partners with manufacturers like NVIDIA to produce these chips and offers critical power management solutions for the rapidly growing AI market.
In mid-December of 2024, Truist analyst William Stein lowered his price target on the company from $887 to $762 while maintaining a Buy rating. This reduction reflects concerns about near-term headwinds within the semiconductor and AI sectors. Despite this, Truist expects the company to benefit from strong AI demand and secure a prominent role in NVIDIA’s upcoming Blackwell GPUs. It powers NVIDIA’s high-performance GPUs. These GPUs are essential for accelerating AI workloads across various applications, including data centers, gaming, and autonomous vehicles.
Notably, automotive revenue surged 28% sequentially in Q3 2024. In the same quarter, the company experienced demand for its power management solutions, particularly for AI applications. It recorded a revenue of $620.1 million, representing a 30% year-over-year growth. This was fueled by improved ordering trends across most end markets and the revenue ramps associated with design wins secured in prior years. While acknowledging potential near-term headwinds in the enterprise data segment, Monolithic Power Systems Inc. (NASDAQ:MPWR) remains optimistic about its long-term growth prospects.
Monolithic Power Systems Inc. (NASDAQ:MPWR) experienced strong performance driven by the demand for its power management solutions, particularly for AI and data center applications. ClearBridge SMID Cap Growth Strategy stated the following in its Q2 2024 investor letter:
“Another top individual contributor was Monolithic Power Systems, Inc. (NASDAQ:MPWR), in the IT sector, which makes semiconductor-based power electronics for the computing and storage, automotive, industrial, communications, and consumer markets. Continued demand for AI-related companies and beneficiaries and anticipation of greater demand for data center components such as power management hardware for CPUs helped drive strong performance in the quarter. We believe Monolithic is one of the most attractive semiconductor plays within the SMID universe and that the company will continue to gain share in analog semiconductors as it wins design contracts.”
12. Elastic NV (NYSE:ESTC)
Number of Hedge Fund Holders: 47
5-Year Revenue CAGR: 32.08%
Upside Potential as of January 15: 32.70%
Elastic NV (NYSE:ESTC) is an AI-powered search company that provides cloud-based solutions for data search, analysis, and visualization. Its platform helps businesses effectively manage structured and unstructured data across diverse environments.
In FQ2 2025, the company’s total revenue increased by 18% year-over-year. This was driven by the increasing demand for its Elastic Search AI Platform, which helps businesses extract valuable insights from their data using powerful search and AI/ML tools. It’s available both as a cloud service and for companies to manage themselves. It allows users to securely store and access huge amounts of data, easily find patterns, and gain valuable insights. The platform also includes an easy-to-use interface with tools for visualizing data.
Elastic Cloud, the company’s cloud-based offering, demonstrated a 25% year-over-year revenue increase in FQ2. This reflects the growing reliance of businesses on cloud technologies and the increasing demand for scalable and on-demand access to data and analytics solutions, including those powered by GenAI. As digital transformation continues to accelerate, Elastic NV (NYSE:ESTC) recognizes the need for organizations to integrate search and AI/ML capabilities across their entire operations.
On 16 December 2024, Morgan Stanley initiated coverage on the company with an Overweight rating and a $130 price target due to the growing adoption of GenAI by enterprises. Subsequently, on 21 December 2024, Morgan Stanley highlighted the company as a key beneficiary of GenAI momentum again. Artisan Global Discovery Fund initiated a new position in the company recently, due to trust in its its search and AI solutions, which position it well for the rise of GenAI. It stated the following regarding Elastic NV (NYSE:ESTC) in its Q2 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in Liberty Formula One, Elastic N.V. (NYSE:ESTC) and Onto Innovation. Elastic is a software company that specializes in search and data analysis solutions. Elastic’s search, observability and security solutions are built on the Elastic Search AI Platform, which thousands of companies use, including more than 50% of the Fortune 500. Customers use the software to gain visibility into their data, reduce mean-time-to-resolution and drive actionable outcomes. We believe the company will benefit from the rise of generative artificial intelligence (AI). It provides a differentiated offering due to the combination of a unique pricing model based on consumption, products that handle numerous data types and volumes, and an open architecture environment that offers generative AI development flexibility.”
11. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 56
5-Year Revenue CAGR: 42.11%
Upside Potential as of January 15: 16.45%
Shopify Inc. (NYSE:SHOP) is an e-commerce platform that provides a SaaS solution that uses AI to automate tasks and personalize shopping experiences. Its competitive strengths include a user-friendly interface, a vast app store, and a mobile-first approach. It’s expanding its reach into the enterprise market with Shopify Plus. This is a premium platform designed for high-growth businesses and offers advanced features and dedicated support.
In the third quarter of 2024, the company’s GMV (gross merchandise value) was up 24%, marking five consecutive quarters of 20%+ growth. This was driven by factors like international expansion, offline sales growth, and new merchant additions. Several AI-driven initiatives contributed to this growth. For instance, AI drives international expansion through features like automated VAT calculations and cross-border compliance within Shopify Tax.
Similarly, Shopify Flow has new AI-powered features that empower merchants with enhanced automation capabilities that streamline workflows. Shopify Inbox has AI-powered reply suggestions that improve customer service response times and boost conversion rates. Loop Capital analyst Anthony Chukumba believes that the company’s extensive use of AI across its platform is driving growth and margin expansion. He upgraded Shopify Inc. (NYSE:SHOP) to Buy on 6 December 2024, raising the price target from $110 to $140.
In FQ4 2024, the company’s revenue growth projection is mid-to-high 20% range year-over-year, driven by ongoing GMV strength. RiverPark Large Growth Fund increased its position in Shopify Inc. (NYSE:SHOP) following GMV results. It’s well-positioned for continued growth driven by e-commerce expansion and new product offerings. It stated the following in its Q3 2024 investor letter:
“Shopify Inc. (NYSE:SHOP): Shopify was a top contributor in the third quarter following a strong second quarter earnings report that included better than expected revenue growth and substantial margin expansion. Gross merchandise value (the value of all items sold on the platform) growth of 22% was three percentage points above investor estimates, revenue of $2.0 billion was $50 million better and free cash flow of $333 million was $80 million better. A combination of new merchants to the company’s platform, increased adoption of SHOP’s offerings by existing merchants, and e-commerce market share gains are driving this revenue growth and profitability.
Last year, 10% of US retail e-commerce sales flowed through SHOP, second only to Amazon, and the company is still enjoying significant tailwinds as retail merchants of all sizes adopt SHOP’s software tools to display, manage and sell their products across a dozen different sales channels. We believe that the overall growth of e-commerce, combined with the development of new products and services, such as its digital wallet Shop Pay, should continue to drive revenue growth of more than 20% per year over the next several years, accompanied by re-acceleration of operating margin growth and FCF generation.”
10. Block Inc. (NYSE:SQ)
Number of Hedge Fund Holders: 64
5-Year Revenue CAGR: 40.67%
Upside Potential as of January 15: 18.26%
Block Inc. (NYSE:SQ) is a fintech company that offers commerce and financial services through its Square and Cash App platforms. Cash App provides mobile financial tools which include peer-to-peer payments, Bitcoin, stock investments, tax services, and buy now, pay later options. The company also owns subsidiaries for decentralized finance, Bitcoin wallets, and open-source Bitcoin projects.
Its stock surged 5% on January 3, following an upgrade by Raymond James to Outperform. The bank anticipates Seller GPV (gross payment volume) for Block Inc. (NYSE:SQ) to surge at least 10% in 2025. While Cash App growth has slowed, Raymond James anticipates continued gross profit expansion. With an attractive valuation, the bank set a $115 price target above the price of $91.20.
Cash App drove the company’s Q3 2024 performance. Cash App’s gross profit surged by 21% year over year, reaching $774 million. The platform witnessed an increase in active monthly users, which now exceeds 57 million. It’s expanding its financial ecosystem. The integration of Afterpay into the Cash App Card has proven to be a game-changer and has transformed it into an alternative to traditional credit cards. It provides users with a convenient buy-now, pay-later option. Resultantly, Cash App’s Seller GPV also grew due to its increasing adoption as a payment solution for businesses. This expansion of Cash App’s seller ecosystem solidifies Block Inc.’s (NYSE:SQ) position as a leader in the fintech industry.
9. Palo Alto Networks (NASDAQ:PANW)
Number of Hedge Fund Holders: 64
5-Year Revenue CAGR: 22.41%
Upside Potential as of January 15: 144.80%
Palo Alto Networks (NASDAQ:PANW) is a cybersecurity company. Its flagship product, Prisma Access, is a SASE platform that integrates network security functions like FWaaS, threat prevention, and DLP. It provides edge protection for applications, users, and devices. This means that it shields company computers and devices from online threats by combining various security features, like firewalls and data protection.
Citi reiterated a Buy rating on the company recently with a $216 price target, due to the increasing demand for cybersecurity solutions because of AI-powered threats. It uses AI-driven ‘Precisions AI’ for automated cyber defense, giving the company a competitive advantage. The cybersecurity market is thriving due to the accelerating adoption of AI, which is also fueling the sophistication of cyber threats.
Palo Alto Networks (NASDAQ:PANW) is focused on platformization. Gartner predicts that by 2028, 45% of organizations will use fewer than 15 cybersecurity tools and the demand for consolidated platforms will rise. This company’s platform strategy centers around AI and automation, using ‘Precision AI’ to analyze data from various security sources and automate threat responses. This approach is exemplified by XSIAM, which is an advanced security platform. It is effectively replacing legacy SIEM solutions and older security systems like QRadar. Platformization and AI-powered innovation will continue to drive sustainable growth for Palo Alto Networks (NASDAQ:PANW).
8. Carvana Co. (NYSE:CVNA)
Number of Hedge Fund Holders: 66
5-Year Revenue CAGR: 29.69%
Upside Potential as of January 15: 18.79%
Carvana Co. (NYSE:CVNA) is an online used car retailer known for its innovative approach to car buying. As the fastest-growing online used car dealer in the US, it offers a seamless digital experience where customers can browse, finance, and purchase vehicles entirely online. It eliminates the need for traditional dealership visits.
The company demonstrated strong scalability and market expansion potential in Q3 2024. It achieved record profitability with a net income of $148 million, solidifying its position as the most profitable public automotive retailer. Its infrastructure is built for significant scale, with reconditioning capacity for over 1 million retail units annually and physical real estate supporting over 3 million units per year.
With 40 million used vehicle transactions annually, and Carvana Co. (NYSE:CVNA) currently holding only 1% market share, a vast untapped market remains. The company is pursuing this opportunity through key growth drivers such as expanding inventory selection, enhancing customer experience, and increasing brand awareness. Carvana Co. (NYSE:CVNA) stock surged 5.03% in the first week of January to $198.35 after RBC upgraded its rating to Outperform and raised the price target to $280. This follows the company’s reinstatement of a $4 billion loan deal with Ally Financial.
Optimist Fund stated the following regarding Carvana Co. (NYSE:CVNA) in its Q3 2024 investor letter:
“Carvana Co. (NYSE:CVNA) continues to perform well with unit growth accelerating from mid-teens in Q1 to over 30% in Q2, while achieving double the adjusted EBITDA margins of the automotive retail sector. It remains our largest position.”
7. MercadoLibre Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 87
5-Year Revenue CAGR: 55.26%
Upside Potential as of January 15: 27.60%
MercadoLibre Inc. (NASDAQ:MELI) is an e-commerce platform that operates in 18 countries with a strong presence in Brazil, Mexico, and Argentina. It has established itself as a dominant force through its extensive logistics network and the development of Mercado Pago, which is a digital payments platform that has evolved into a Fintech segment.
The company delivered exceptional growth in Q3 2024. In Brazil, GMV (gross merchandise value) surged 34% year-over-year, while Mexico saw a 27% increase. In Argentina, the platform surpassed a milestone, processing over a record 60 million items sold. This was fueled by a record 7 million new buyers. This highlights the untapped potential in the Latin American e-commerce market, where online penetration remains relatively low at only 15%.
Strategic investments across commerce and fintech platforms have significantly improved delivery speeds and reliability. The expansion of the logistics network, with the addition of six new fulfillment centers (five in Brazil and one in Mexico), further enhanced this improvement. These translated into revenue growth of 35% year-over-year.
The 3 most recent analyst ratings were released by JP Morgan, Wedbush, and Citigroup on January 8 and January 6 in 2025, and November 26 in 2024, respectively. With an average price target of $2166.67 between JP Morgan, Wedbush, and Citigroup, there’s an implied 17.51% upside for the company. MercadoLibre Inc.’s (NASDAQ:MELI) e-commerce and fintech businesses are driving strong growth for it, with a leading brand and attractive valuation despite potential future competition. Infuse Asset Management stated the following regarding the company in its Q4 2024 investor letter:
“Staying in Latin America, MercadoLibre, Inc. (NASDAQ:MELI) continues to spin its commerce/payments flywheel. While it started out as an e-commerce platform, its fintech business is now much larger. When management pulled back on giving out loans for fear of a worsening economy, overall revenue growth picked up with accelerating GMV in the core e-commerce business. Then, the finance business segment started to reaccelerate when the team realized nonperforming loan ratios were lowered than expected. But the segments aren’t fully independent. There is a beautiful synergy as on-platform payments lower the friction for the commerce business and faster delivery times lead to more orders and therefore more payments. Meanwhile, MELI also offers a plethora of tools for merchants in both commerce and finance. The company is still growing more than 30% and it has a leading brand in Latin America. Someday Nu and MercadoLibre will bump up against each other but I think we still have at least 5 years before they start competing head-on. For less than 30x forward earnings, the valuation is still reasonable for the company.”
6. Advanced Micro Devices Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 107
5-Year Revenue CAGR: 32.17%
Upside Potential as of January 15: 53.37%
Advanced Micro Devices Inc. (NASDAQ:AMD) is a semiconductor company that specializes in high-performance computing and graphics solutions. Its product portfolio includes CPUs, GPUs, FPGAs, and adaptive SoCs, and serves diverse industries like data centers, gaming, and embedded systems.
Northland Capital has recently issued an Outperform rating for the company, setting a $175 price target. This outlook is driven by anticipated market share gains across key segments: AI GPUs, server CPUs, and personal computers. The firm projects a surge in AI revenue, from $5.2 billion in 2024 to $9.5 billion in 2025, while non-AI data center revenue is estimated at $8.5 billion. This growth trajectory is fueled by the demand for high-performance hardware to support advanced machine-learning models.
It reported record Q3 2024 revenue of $6.8 billion, driven by a 122% surge in Data Center revenue to $3.5 billion. This was driven by EPYC CPUs and Instinct GPUs, crucial for powering AI workloads, including training LLMs and running complex ML inference tasks. EPYC CPUs are powering critical services for major tech companies like Microsoft, Meta, Google, and AWS. As AI applications continue to proliferate, the demand for high-performance computing solutions is poised to accelerate further, driving continued growth for Advanced Micro Devices Inc. (NASDAQ:AMD).
5. Salesforce Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 116
5-Year Revenue CAGR: 18.60%
Upside Potential as of January 15: 28.41%
Salesforce Inc. (NYSE:CRM) is a cloud-based software provider that specializes in customer relationship management (CRM) solutions. Its core offerings include Sales Cloud and Service Cloud, which integrate advanced AI capabilities. Its Data Cloud is well-positioned to capitalize on the growing AI trend, as businesses increasingly adopt AI-driven CRM strategies.
Salesforce Data Cloud is particularly important for AI transformations and is featured in 8 of the top 10 deals in FQ3 2025. 25% of Fortune 100 are Data Cloud customers, including IBM. The company uses IBM’s reach to boost Data Cloud adoption. Data Cloud has 1.9 trillion weekly AI transactions and 83.2 billion weekly workflows.
Constellation Research’s Ray Wang is of the opinion that software companies that use AI to serve customers who lack the expertise to develop their own AI solutions are rather important. However, analyst Gil Luria warns of modest near-term AI revenue impact due to pricing concerns and the company’s scale. Salesforce Inc. (NYSE:CRM) recently raised its FQ4 2025 revenue guidance to $9.9-$10.10 billion, representing a growth of nearly 8%.
The company’s growing AI integration is 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.”
4. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 123
5-Year Revenue CAGR: 14.00%
Upside Potential as of January 15: 49.00%
Adobe Inc. (NASDAQ:ADBE) is a software company that is known for its creative products including Photoshop, Illustrator, InDesign, Acrobat, and Premiere Pro. It has made strides with its Firefly GenAI technology and has been integrating AI capabilities across its Creative, Document, and Experience Clouds. This move aims to enhance user productivity and expand product offerings.
Earlier on 20 November 2024, Morgan Stanley analyst Keith Weiss gave a Buy rating on the shares of the company with a price target of $660.00. However, investors expressed concerns about the potential delayed returns from the company’s investments in AI-powered software applications. For this reason, its stock declined following a 2025 revenue forecast of $23.3 to $23.55 billion, falling short of analysts’ expectations of $23.77 billion. Still, Constellation Research’s Ray Wang remains optimistic about Adobe Inc. (NASDAQ:ADBE) in 2025, due to the company’s strong position as an AI derivative.
The company launched several AI models in 2024, including Firefly, which powers advanced GenAI capabilities for images, vectors, designs, and videos within core applications like Photoshop and Premiere Pro. AI-driven creativity contributed to record FY2024 revenue of $21.51 billion, an 11% year-over-year increase. Since its March 2023 beta release, Firefly has generated over 13 billion images.
Polen Focus Growth Strategy increased its holdings in the company, anticipating revenue growth which it expects Firefly to deliver. Here’s what it stated 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.”
3. Uber Technologies Inc. (NYSE:UBER)
Number of Hedge Fund Holders: 136
5-Year Revenue CAGR: 26.31%
Upside Potential as of January 15: 34.73%
Uber Technologies Inc. (NYSE:UBER) is a technology company that operates a platform that connects consumers with service providers globally. It operates through 3 segments which include Mobility, Delivery, and Freight. It provides flexible and cost-effective transportation options to its customers, eliminating the need for personal vehicle ownership.
The company is poised for growth in 2025, driven by its sustainable and technological innovations. It’s accelerating its transition to an electric and zero-emission platform, evidenced by a 16% increase in gross bookings in Q3 2024. This commitment is further solidified by initiatives like expanding EV-only ride options, AI-powered driver support, and a focus on eco-friendly delivery practices. Uber Technologies Inc. (NYSE:UBER) aims for a fully electric and zero-emission platform by 2040. The company is also capitalizing on the autonomous driving wave through partnerships like the one with NVIDIA for AI-powered simulation.
This, together with a $1.5 billion share repurchase program, has boosted investor confidence in Uber Technologies Inc. (NYSE:UBER). Analysts are bullish on the company, with Wolfe Research raising its price target to $92 and MarketBeat highlighting the potential for 40% share price growth. Major brokerages also recognize its growth potential, adding it to their high-conviction lists.
2. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM)
Number of Hedge Fund Holders: 158
5-Year Revenue CAGR: 20.53%
Upside Potential as of January 15: 17.03%
Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is a chipmaker that supplies advanced semiconductors to tech giants like Apple, NVIDIA, Qualcomm, and AMD. Its dominance in the industry, particularly in AI and high-performance computing, is driven by cutting-edge technology, including 2nm production and leadership in 3nm, 5nm, and 7nm nodes.
The company holds over 60% of the market share and benefits from industry-wide supply constraints, giving it significant pricing power. This has driven a 39% year-over-year revenue increase in Q3 2024, due to the surging demand for AI hardware. The company’s advanced manufacturing, including its crucial CoWoS packaging technology for AI chips, solidifies its leadership in semiconductor innovation.
Bank of America Securities analyst Brad Lin reiterated his Buy rating on the company, setting a $250 price target. Lin anticipates robust revenue growth in 2025 due to the increasing demand for AI and high-performance computing. He also emphasized the company’s attractive valuation, projected margin expansion, favorable industry tailwinds, and the potential for government support.
Wedgewood Partners acknowledged that Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is a top performer due to the surging demand for its advanced chips, which is driven by AI. Despite its dominant market position, it trades at a discount to other large-cap growth stocks, making it an attractive investment opportunity. Wedgewood Partners stated the following in its Q4 2024 investor letter:
“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was another top contributor to performance during the quarter and for the year. The Company’s earnings growth dramatically accelerated compared to last year as the Company’s wafer fabrication and packaging volumes soared in 2024. In addition, the Company customer prices rebounded in the face of more normalized capital expenditures. The Company maintains a near-monopoly in the fabrication of nearly every new AI accelerator brought to market over the past two years. They continue investing tens of billions to build and 7ill future capacity with orders for what seems to be insatiable hyperscale demand for accelerated computing. The stock ended the year trading at a consensus forward earnings multiple that is several points lower than large cap growth benchmarks, despite the Company’s dominant position in the most important industry that is driving one of the largest technological shifts in a generation.”
1. NVIDIA Corp. (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
5-Year Revenue CAGR: 62.43%
Upside Potential as of January 15: 30.72%
NVIDIA Corp. (NASDAQ:NVDA) is a technology company that designs and manufactures GPUs for gaming and professional markets. It also develops AI platforms, high-performance computing solutions, and self-driving car technologies to power industries like gaming, data centers, and automotive.
Bank of America maintained its $190 price target for the company recently, suggesting a 27% upside potential. This optimism is driven by the release of Blackwell GPUs, which have already secured 12 months of orders. At CES 2025, the company unveiled Project DIGITS, a personal AI supercomputer powered by the new GB10 Grace Blackwell Superchip. This compact system delivers petaflop-level AI performance while operating on standard household electricity. Project DIGITS is designed to empower researchers, data scientists, and students to develop and run large AI models locally. With 128GB of memory and up to 4TB of storage, the system is well-equipped to handle demanding AI workloads.
In Q3 2024, NVIDIA Corp. (NASDAQ:NVDA) achieved record revenue of $35.1 billion, a 94% year-over-year surge. This was driven by a 112% increase in Data Center revenue to $30.8 billion. GPU revenue has demonstrated robust growth, surging 67% annually over the past three years. This performance is fueled by the demand for computing power necessitated by advancements in AI and ML.
Manole Capital Management noted that NVIDIA Corporation (NASDAQ:NVDA) more than tripled in value over the past year, due to strong AI-related demand and continued revenue growth that exceeds market expectations. Here’s what it said 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.”
As we acknowledge the growth potential of NVIDIA Corp. (NASDAQ:NVDA), 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 NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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