This article presents an overview of the 5 Best Stocks To Buy According to Billionaires. For a detailed overview of such stocks, read our article, 15 Best Stocks To Buy According to Billionaires.
5. NVIDIA Corp (NASDAQ:NVDA)
Number of Billionaire Investors: 29
That NVIDIA Corp (NASDAQ:NVDA) is among the top favorite stocks of billionaires is not a surprise since NVIDIA Corp (NASDAQ:NVDA) is cruising thanks to the huge demand for its chips after the generative AI boom. Insider Monkey’s database of billionaires shows that 29 billionaires had stakes in NVIDIA Corp (NASDAQ:NVDA) as of the end of the September quarter. Rajiv Jain, Ken Fisher, Israel Englander and Ken Griffin were among the most notable billionaires with stakes in NVIDIA Corp (NASDAQ:NVDA).
Polen Focus Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its fourth quarter 2023 investor letter:
“Apple and NVIDIA Corporation (NASDAQ:NVDA) alone drove over 1,100 basis points of the Russell 1000 Growth Index’s 42% return, so not owning them was a meaningful headwind to our relative return in 2023. NVIDIA shares rocketed higher by well over 200% in 2023 although they slightly underperformed our Portfolio and the Russell 1000 Growth in the fourth quarter. Generative AI has been a huge boon for NVIDIA as the use of LLMs like ChatGPT and others requires tremendous processing power that, today, is mostly provided by NVIDIA’s GPUs. All large cloud service providers, AI factories, and many large consumer internet companies are laying the foundation for generative AI by deploying NVIDIA GPUs and other parallel processing chips to be able to do large scale generative AI either for internal use (i.e., Meta) or as a service for others (i.e., AI factories) or both (cloud service providers such as Amazon, Microsoft, and Google).
Given many of NVIDIA’s customers or its end customers are still very much in the experimentation phase with generative AI, it is unclear how sustainable the current demand for GPUs truly is. At the same time, it is known that NVIDIA has historically been highly cyclical. By the end of 2024, we believe NVIDIA will already account for roughly half the market for datacenter chips, servers, and networking equipment, which is unprecedented. Even though the valuation at 25x forward earnings doesn’t look very demanding at first glance, it assumes NVIDIA will own virtually the entire datacenter chip market in just the next few years and will sustain year-on-year growth despite being a cyclical business that is currently experiencing much higher new peaks.
We believe NVIDIA is a highly advantaged business, but we also believe the long-term growth outcomes are currently too variable, and the expectations built into the company’s $1.2 trillion valuation as of this writing assume the most optimistic of those scenarios.”
4. Meta Platforms Inc (NASDAQ:META)
Number of Billionaire Investors: 32
Piper Sandler recently ranked the Magnificent Seven group of stocks using its Macro Select model. Meta Platforms Inc (NASDAQ:META) stood at the second position in the ranking. Here’s what Piper Sandler said about its ranking model:
“The Macro Select model is our dynamic long model. The model screens for stocks with the factor traits we believe are most important for the prevailing backdrop: FCF Yield, EPS Growth, EPS Revisions, CF ROE.”
A total of 32 billionaires in Insider Monkey’s database of billionaires had stakes in Meta Platforms Inc (NASDAQ:META).
Fundsmith Equity Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its 2023 investor letter:
“Meta Platforms, Inc.’s (NASDAQ:META) (formerly Facebook) performance makes me wonder whether I should have a fund which invests solely in the one stock in our portfolio each year for which we have received the most critical comments. Meta makes its third appearance in this list of top contributors while Microsoft appears for the eighth time having attracted strident criticism when we started buying at about $25 a share in 2011 (2023 year end price $376).”
3. AMAZON.Com Inc (NASDAQ:AMZN)
Number of Billionaire Investors: 33
Morgan Stanley’s Mike Wilson recently listed AMAZON.Com Inc (NASDAQ:AMZN) among the stocks he believes would gain after Q4 earnings. Wilson has a $185 price target on AMAZON.Com Inc (NASDAQ:AMZN). AMAZON.Com Inc (NASDAQ:AMZN) is slated to announce its Q4 results on February 1.
A total of 33 billionaires in Insider Monkey’s database had stakes in AMAZON.Com Inc (NASDAQ:AMZN) as of the end of the third quarter of 2023.
Polen Focus Growth Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its fourth quarter 2023 investor letter:
“For the full year, the top relative and absolute contributors were Amazon.com, Inc. (NASDAQ:AMZN), Salesforce, and ServiceNow. Amazon shares appreciated 88% in 2023, driven primarily by rapidly expanding operating profit margins and free cash flow growth. After the pandemic, Amazon experienced a period of inefficiency and overinvestment in its distribution and logistics infrastructure. Amazon is now leveraging these investments as growth returned to its e-commerce business in 2023 after a highly unusual 2022. At the same time, Amazon’s rapidly growing and high-margin advertising business is contributing strongly to the entire company’s operating profit growth. The AWS (Amazon Web Services) cloud infrastructure and services business continued to slow in 2023 as customers anticipating a more difficult economic environment looked to save money on their cloud spend, but these cloud spending optimizations began to stabilize in the second half of 2023. We now expect customer interest in generative AI will begin to contribute to growth.”
2. Microsoft Corp (NASDAQ:MSFT)
Number of Billionaire Investors: 34
Microsoft Corp (NASDAQ:MSFT) tops the list of the 15 best stocks to buy according to billionaires, with 34 billionaires having stakes in Microsoft Corp (NASDAQ:MSFT) as of the end of the September quarter. Among the top billionaire stakeholders of Microsoft Corp (NASDAQ:MSFT) include Ken Fisher, D. E. Shaw, Rajiv Jain and Israel Englander.
Polen Focus Growth Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its fourth quarter 2023 investor letter:
“The largest relative detractors in the quarter were Illumina, Airbnb, and Microsoft Corporation (NASDAQ:MSFT). Microsoft’s business continues to grow well, albeit at slower rates than in the previous few years. That said, it was a relative detractor to the Portfolio because our 7% average weighting for both the quarter and the year were significantly lower than the 12% benchmark weighting in the Russell 1000 Growth. Microsoft shares appreciated a benchmark-beating 19% in 4Q and 58% in 2023.
In addition, we also expect generative AI to help not just Microsoft’s Azure cloud service business grow, but also to be an additional growth driver for the company’s Productivity Suite (Word, Excel, PowerPoint, etc.) and Power Platform, which helps build internal apps for businesses.
Microsoft has created generative AI co-pilots, which are bots that use large language models (LLMs) to make a customer’s Microsoft software even more functional. As an example, co-pilot offerings from Microsoft can take text and data from Word and Excel and automatically create a PowerPoint presentation from it. We expect to see generative AI demand from Azure customers becoming a larger contributor to growth of that segment while Microsoft Co-pilot becomes a premium feature of the high-end Microsoft commercial bundles, leading to better pricing. Given the strength of the company’s existing businesses and the expected strong product cycle driven by generative AI advancements, we chose to add to our Microsoft position. It is now our second largest position behind Amazon.”
1. Alphabet Inc Class A (NASDAQ:GOOGL)
Number of Billionaire Investors: 34
Piper Sandler recently ranked the Magnificent Seven stocks based on their strengths. Alphabet Inc Class A (NASDAQ:GOOGL) is the most attractive stock according to the investment firm.
A total of 34 billionaires tracked by Insider Monkey had stakes in Alphabet Inc Class A (NASDAQ:GOOGL) as of the end of the September quarter. The total worth of these stakes was $13.4 billion.
Ensemble Capital Management stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its fourth quarter 2023 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) (8.52% weight in the Fund): Google’s earnings report in October showed its core advertising business accelerating to double digit growth as the digital advertising recession of 2022 and early 2023 fades away. However, the company’s Cloud division, which is expected to generate growth from selling access to artificial intelligence services, saw its growth rate slow modestly. Juxtaposed with Microsoft’s Cloud business seeing growth pick up slightly, investors sold off Google’s stock on the report. While the stock recovered to new highs by the end of the year, the earnings report set back caused the stock to trail behind the S&P 500 with a gain of 6.8% for the quarter.”
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