In this article, we will take a look at the 5 best internet content stocks to buy. To see more such companies, go directly to 11 Best Internet Content Stocks to Buy.
5. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 117
As of the end of last year, Netflix, Inc. (NASDAQ:NFLX) has 231 million paid subscribers. Netflix, Inc. (NASDAQ:NFLX) is one of the top 50 most visited websites in the world. During the first quarter of 2023, Netflix, Inc. (NASDAQ:NFLX)’s GAAP EPS came in at $2.88, beating estimates by $0.01.
As of the end of the fourth quarter of 2022, 117 hedge funds were long Netflix, Inc. (NASDAQ:NFLX). The total worth of these hedge fund stakes was $8.1 billion. The biggest stakeholder of Netflix, Inc. (NASDAQ:NFLX) was Eagle Capital Management of Boykin Curry which owns a $1.5 billion stake.
LVS Advisory made the following comment about Netflix, Inc. (NASDAQ:NFLX) in its Q1 2023 investor letter:
“We initiated our investment in Netflix, Inc. (NASDAQ:NFLX) during the summer of 2022 (discussed in our Q3 2022 letter). Netflix was a baby thrown out with the bath water by the market last year. We found Netflix attractive because the company signaled that it would hold expenses flat while better monetizing its account base via an advertising tier and paid sharing. Despite an impeccable track record of execution, the market didn’t believe Netflix could navigate this transition. While the market now appears to buy into the expense story the market doesn’t fully appreciate the revenue growth story that will play out from the new monetization initiatives. Furthermore, the stock’s pullback during the banking crisis provided an attractive entry point for us to make Netflix an overweight position.”
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 135
Apple Inc. (NASDAQ:AAPL) is one of the best internet content stocks because the company’s hardware and software services are used by billions of people to access internet content of various types. There are about 1.8 billion Apple Inc. (NASDAQ:AAPL) devices in the world, on which millions of users access internet content. Apple Inc. (NASDAQ:AAPL)’s streaming service, Apple TV+, Apple Podcasts and other media services also make the company a notable internet content company.
As of the end of the last quarter of 2022, 135 hedge funds had stakes in Apple Inc. (NASDAQ:AAPL). The biggest hedge fund stakeholder of Apple Inc. (NASDAQ:AAPL) during this period was Warren Buffett’s Berkshire Hathaway which owns an $116 billion stake in the company.
Polen Global Growth Strategy made the following comment about Apple Inc. (NASDAQ:AAPL) in its Q1 2023 investor letter:
“Not owning Apple Inc. (NASDAQ:AAPL) and NVIDIA detracted from our relative performance. With respect to Apple, we have not felt that the combination of growth available and the valuation made for one of our best ideas. Concerning NVIDIA, while there seems to be strong demand for data center chips, the valuation and lack of clarity around pace and magnitude of that growth has kept us at bay to date.”
3. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 194
Meta Platforms, Inc. (NASDAQ:META)’s Facebook has over 2 billion monthly active users as of the end of 2022. This shows the extent of Meta Platforms, Inc. (NASDAQ:META)’s dominance in the social media industry. Facebook plays a key role in the internet content industry. Meta Platforms, Inc. (NASDAQ:META) also owns Instagram, which has over 2 billion monthly active users, according to Sprout Social.
Meta Platforms, Inc. (NASDAQ:META) shares gained ground recently after the company posted an upbeat ads revenue, an unexpected development in the current macro-economic backdrop. Meta Platforms, Inc. (NASDAQ:META)’s ads revenue in the first quarter of 2023 jumped to $28.1 billion, better than analysts’ estimate of $26.88 billion.
Giverny Capital made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q1 2023 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) was our leading performer, up 76% for the quarter. I have written quite a bit about Meta in prior letters and I feel like I got the basics right: Meta never had an earnings or engagement problem so much as an expense management problem. Once founder and CEO Mark Zuckerberg announced layoffs and a new commitment to efficiency, the stock doubled in a few months.”
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 209
Alphabet Inc. (NASDAQ:GOOG) is behind the top two most visited websites in the world: Google.com and YouTube. A major chunk of internet content that reaches us is in two forms, video and text. Alphabet Inc. (NASDAQ:GOOG) remains the dominant player in both these content streams.
Alphabet Inc. (NASDAQ:GOOG) is one of the top favorite stocks of elite hedge funds. As of the end of the fourth quarter of 2022, 209 hedge funds had stakes in Alphabet Inc. (NASDAQ:GOOG). The biggest hedge fund stakeholder of Alphabet Inc. (NASDAQ:GOOG) was TCI Fund Management of Chris Hohn which owns a $4.8 billion stake in the company.
Polen Focus Growth Strategy made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q1 2023 investor letter:
“One area we are watching regarding Alphabet Inc. (NASDAQ:GOOG) and Adobe is AI systems and their capabilities, including generative AI. Interestingly, both Adobe and Alphabet could see benefits or threats from the emergence of generative AI and large language models (LLMs). Both companies already use generative AI to the benefit of their users in anticipating how content creators edit their work (Adobe) and in how search results are anticipated and generated (Google). At the same time, breakthrough technologies like AI can open the door to additional competition and/or impact a company’s profitability levels. We now see AI systems others are developing, including LLMs and generative AI offerings, that could be more competitive in the future. While we think it remains early days for ChatGPT and the capabilities of these types of LLMs and generative AI programs like DALL-E, the technology seems to be progressing at a fast rate and will at least require a strong response from incumbents.
As of now, we believe Alphabet and Adobe are leaders in their own right in these areas and have a clear path to improving their existing offerings with AI advancements, which would allow them to be net beneficiaries of AI. There are also significant barriers to building leading AI offerings in these areas. As a result, our position sizes in Adobe and Alphabet remain sizeable. For Adobe, the status of its pending $20 billion-plus Figma acquisition is also uncertain. There is a good chance, in our view, that it will be blocked by regulators, which would mean the future opportunity to expand its offerings to the developer community (beyond designers) may not occur.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 240
Amazon.com, Inc. (NASDAQ:AMZN)’s Cloud platform AWS is used by major media and streaming companies for content storage and delivery over the internet. AWS customers include Comcast, Discovery Inc., Netflix, ViacomCBS, among other big names.
Amazon.com, Inc. (NASDAQ:AMZN) also has its own streaming service, Amazon Prime, which has over 200 million subscribers.
Amazon.com, Inc. (NASDAQ:AMZN) is one of the most popular stocks among the elite hedge funds tracked by Insider Monkey. A total of 240 hedge funds have stakes in Amazon.com, Inc. (NASDAQ:AMZN).
Polen Global Growth Strategy made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2023 investor letter:
“We raised our position in Amazon.com, Inc. (NASDAQ:AMZN). During 2022, Amazon’s business experienced revenue deceleration from pre-pandemic levels combined with higher expenses resulting from inflation pressures as well as costs in their fulfillment segment. The fulfillment costs were set in motion during the pandemic when demand overwhelmed their network. More recently, AWS – along with Azure and GCP – experienced a deceleration in growth as customers globally feel pressure to optimize their usage in this tough macroeconomic environment. We don’t expect this deceleration to persist for the long-term given the secular trend of companies transitioning to the cloud.
For long-term investors, we believe this combination provides an opportunity and that Amazon is now poised to re-accelerate revenue growth, of which we are already seeing signs, while expanding margins and free cash flow. With respect to margins, given the fast growth in AWS and advertising, the latter generating almost $40 Billion in sales and growing at greater than 30% recently, the resulting mix-shift could result in operating margins of 10% or higher over time. This level would represent a 5x increase over 2022 levels. In sum, we are capitalizing on what we believe is arguably one of the most competitively advantaged business in the world, which is growing well, poised to accelerate that growth and expand margins, and is trading at an attractive price.”
You can also take a peek at 10 Most Profitable Small Businesses in 2023 and 10 Best April Dividend Stocks To Buy.
