5 Stocks Most Bought By Hedge Funds

In this article, we discuss 5 stocks most bought by hedge funds. If you want to read our discussion on the stock market landscape and the performance of popular hedge funds, head directly to 12 Stocks Most Bought By Hedge Funds. 

5. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 173

NVIDIA Corporation (NASDAQ:NVDA) is one of the most owned stocks by hedge funds. On February 28, BofA observed that Nvidia’s dominance in the data center sector is on the rise, with over 85% of its total sales expected to come from this segment, a significant increase from 25% five years ago. In Q4 2023, Nvidia sold over 900,000 GPU silicon units, more than double the previous year’s figure, capturing 95% of the market share. The Hopper and H100/HGX platform played a major role in Nvidia’s data center revenue. Bank of America analyst Vivek Arya maintained a Buy rating on NVIDIA Corporation (NASDAQ:NVDA), anticipating continued growth in the nearly $90 billion accelerator market.

According to Insider Monkey’s fourth quarter database, 173 hedge funds were bullish on NVIDIA Corporation (NASDAQ:NVDA), compared to 180 funds in the prior quarter. Rajiv Jain’s GQG Partners is a significant position holder in the company, with 13.90 million shares worth $6.8 million. 

SaltLight Capital stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its fourth quarter 2023 investor letter:

“We were fortunate to have some exposure to some of the ‘Magnificent Seven’ – Amazon, NVIDIA Corporation (NASDAQ:NVDA), Meta Platforms and Google (although in aggregate, we still hold a smaller weighting than the S&P 500).

While we are cautious in AI infrastructure, we do think there are mispriced opportunities in areas of application software where AI can be infused to make a step change improvement. Posted in our office is this chart that ASML provides at each of its investor days. This chart is a little outdated from 2021, but we think illustrates how value (in operating profit) was distributed across semiconductors, hardware, and then software & services. It’s very clear that most of the economic value in the past has accrued to the software services (in gray) built on the backs of highly technical companies run by extremely smart people.

Why is this? We think it is due to a combination of distribution and network effects. Our working hypothesis right now is that this will likely remain a similar outcome in the AI epoch. One outlier right now is Nvidia which is capturing 80% margins..” (Click here to read the full text)

4. Alphabet Inc. (NASDAQ:GOOGL)

Number of Hedge Fund Holders: 214

Alphabet Inc. (NASDAQ:GOOGL) are Class A shares that come with voting rights, allowing shareholders to have a say in corporate decisions during shareholder meetings. Alphabet Inc. (NASDAQ:GOOGL) is one of the most owned stocks by hedge funds. According to Insider Monkey’s fourth quarter database, 214 hedge funds were bullish on Alphabet Inc. (NASDAQ:GOOGL), compared to 221 funds in the last quarter. 

Madison Sustainable Equity Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its fourth quarter 2023 investor letter:

“Alphabet Inc. (NASDAQ:GOOG) was positive during the quarter but had a more modest gain in the fourth quarter following a strong third quarter and as a result, lagged the Technology sector more broadly. Alphabet’s third quarter included solid Search and YouTube results while Cloud growth was a bit softer, growing at 22% year-over-year. Google continues to incorporate AI in its core search businesses. It has been rolled out to a wide number of users across multiple geographies. We will continue to watch how Google adapts AI in its businesses and monitor cloud growth.”

3. Meta Platforms, Inc. (NASDAQ:META)

Number of Hedge Fund Holders: 242

Meta Platforms, Inc. (NASDAQ:META) ranks 3rd on our list of the most owned stocks by hedge funds. Meta Platforms, Inc. (NASDAQ:META) declared its first-ever quarterly dividend of $0.50 per share dividend. The dividend is payable on March 26, to shareholders on record as of February 22. The company also announced a $50 billion increase in share repurchase authorization.

According to Insider Monkey’s fourth quarter database, 242 hedge funds were long Meta Platforms, Inc. (NASDAQ:META), compared to 234 funds in the last quarter. Rajiv Jain’s GQG Partners is the biggest stakeholder of the company, with 11.15 million shares worth $4 billion. 

SaltLight Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its fourth quarter 2023 investor letter:

“Meta Platforms, Inc.’s (NASDAQ:META) primary mission is all about capitalising on user engagement and maintaining its network effects. AI is augmenting their objectives in two ways: 1) Improving engagement time per daily active user (AI Job One) 2) Matching ad buyers (advertisers) with ad consumers (AI Job Two)

Improving Engagement Time per Daily Active User Meta is in the business of making sure that when you’re scrolling through your feed or watching videos, you’re glued to the screen as long as possible. Why? Because the longer you watch, the more ads they can slip into your viewing experience (think of digital billboards). But these ‘digital billboards’ are a finite resource – only more engagement time creates them.

And here’s where the magic of ‘AI job one’ comes in – finding that perfect video that keeps you hooked – thereby increasing the time you spend on the platform. It’s a cycle that feeds itself: more engagement means more opportunities to serve ads, which in turn means more revenue…” (Click here to read the full text)

2. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 293

Amazon.com, Inc. (NASDAQ:AMZN) is one of the most favored stocks among elite hedge funds. On February 26, Amazon’s cloud computing unit, Amazon Web Services (AWS), announced that it plans to invest $5 billion in cloud infrastructure projects in Mexico over the next 15 years. This investment is part of a long-term commitment to the Latin American markets. The new AWS Mexico Region aims to provide customers with increased access to advanced and secure cloud technologies. Prasad Kalyanaraman, Vice President of Infrastructure Services at AWS, stated that the investment reflects AWS’s dedication to enabling customers to leverage advanced technologies like artificial intelligence and machine learning.

According to Insider Monkey’s fourth quarter database, 293 hedge funds were long Amazon.com, Inc. (NASDAQ:AMZN), compared to 286 funds in the prior quarter. Boykin Curry’s Eagle Capital Management is a prominent stakeholder of the company, with 13.6 million shares worth $2 billion. 

Polen Global Growth Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its fourth quarter 2023 investor letter:

“Amazon.com, Inc. (NASDAQ:AMZN), which saw significant price appreciation throughout much of 2023, saw its share price increase materially in Q4 following the company’s Q3 2023 earnings report. We have yet to see the long-awaited re-acceleration in AWS (Amazon Web Services) revenue growth. However, in our estimation, the segment’s growth has likely bottomed, and we could see accelerating growth in 2024. Further, Amazon’s e-commerce business has gradually re-accelerated from 2022’s levels and, perhaps most importantly, the company’s margins and free cash flow have rebounded materially from last year. This rebound in margins and free cash flow at Amazon has been a key component of our long-term thesis for the business, and we expect the improvement in these metrics to continue into 2024 and beyond (though perhaps not linearly) as the company continues to optimize costs and capital expenditures. Our position in Amazon reflects our positive long-term expectations of the business, and it is currently our largest absolute weight in the Portfolio.”

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 302

Microsoft Corporation (NASDAQ:MSFT) ranks 1st on our list of the most owned stocks by hedge funds. On February 29, Microsoft announced that it is launching Copilot for Finance, a tool designed to aid workers in finance by facilitating tasks such as conducting variance analysis in Excel. The new offering incorporates natural language prompts to efficiently review data sets for anomalies, risks, and unmatched values. The feature is currently available to the public in preview mode.

According to Insider Monkey’s fourth quarter database, 302 hedge funds were bullish on Microsoft Corporation (NASDAQ:MSFT), compared to 306 funds in the last quarter. Bill & Melinda Gates Foundation Trust is the biggest stakeholder of the company, with 38.2 million shares worth $14.3 billion. 

RiverPark Large Growth Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its fourth quarter 2023 investor letter:

“Microsoft Corporation (NASDAQ:MSFT): MSFT was a top contributor in the quarter following strong FY1Q24 earnings in late October. In that earnings report, MSFT delivered better-than-expected revenue (+13%) and earnings (+27%), with growth in both accelerating from the prior quarter. All three major segments grew revenue faster than expected, highlighted by 28% constant currency growth in Azure, the company’s cloud offering. This marked the first quarter-over-quarter acceleration for Azure in six quarters. Operating margins (48%) were 400 basis points better than expected and earnings came in 13% ahead of expectations.

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 $100 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 both return to shareholders and use for acquisitions.”

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