In this article, we discuss the 5 tech stocks with the biggest upside. If you want to read about some more tech stocks with the biggest upside, go directly to 12 Tech Stocks With Biggest Upside.
5. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 117
Salesforce, Inc. (NYSE:CRM) provides customer relationship management technology that brings companies and customers together worldwide. On November 29, Salesforce revealed that its customers drove more than 115 million orders in November. The digital sales of the company’s Commerce Cloud grew 7% year over year on Thanksgiving, 14% on Black Friday and 10% on Cyber Monday.
On December 5, Credit Suisse analyst Phil Winslow maintained an Outperform rating on Salesforce.com, inc. (NYSE:CRM) stock and lowered the price target to $225 from $250, noting that the company reported solid third-quarter results on the income statement. However, while cRPO growth of 12% year-over-year was consistent with guidance and consensus of 12%, it included 100 bps of incremental FX headwind.
At the end of the third quarter of 2022, 117 hedge funds in the database of Insider Monkey held stakes worth $8.2 billion in Salesforce, Inc. (NYSE:CRM), compared to 116 in the preceding quarter worth $7.9 billion.
In its Q3 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Salesforce, Inc. (NYSE:CRM) was one of them. Here is what the fund said:
“Salesforce, Inc. (NYSE:CRM) has become a dominant global player in sales, customer service, commerce and marketing software over the past 20 years. The company earns 80% gross margins and grows 20% organically. Plus, virtually all of its revenue is recurring. We see Salesforce as a great business that we’ve admired from afar for a long time. More recently, the organization has made some changes at the top that prompted us to take a closer look at the stock. New CEO Bret Taylor and CFO Amy Weaver are bringing a culture of financial discipline. We believe this renewed focus on profitability and capital return, combined with Salesforce’s strong underlying business characteristics, will yield strong results. The current valuation of 3.9x next year’s revenues represents a significant discount compared to publicly traded peers and recent private market values in the software space that have similar growth profiles. We view this discount as an opportunity to invest in a great business at a good value.”
4. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 126
PayPal Holdings, Inc. (NASDAQ:PYPL) operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. On November 16, PayPal launched Return Shopping for Shopify to provide a new revenue stream for merchants of Shopify. This feature will drive customers to the merchant’s e-commerce storefronts within the return process. On November 18, PayPal revealed that in the third quarter of 2022, its total payment volume grew by 8.7 percent compared to the same quarter one year before. This payment volume was generated through the over 5.5 billion transactions which PayPal processed during that period.
On December 12, Barclays analyst Ramsey El-Assal maintained an Overweight rating on PayPal Holdings, Inc. (NASDAQ:PYPL) stock and raised the price target to $108 from $100.
Among the hedge funds being tracked by Insider Monkey, Camas, Washington-based investment firm Fisher Asset Management is a leading shareholder in PayPal Holdings, Inc. (NASDAQ:PYPL) with 17.7 million shares worth more than $1.5 billion.
In its Q2 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and PayPal Holdings, Inc. (NASDAQ:PYPL) was one of them. Here is what the fund said:
“This quarter, we bought shares in PayPal (NASDAQ:PYPL), the payments platform. PayPal has been one of the more high-profile victims of the market’s brutal ruthlessness over the past few months, and the stock fell by over two-thirds between its peak in July to the beginning of March this year. As we progressed PayPal through the Mayar Checklist Process, we identified a business with a leadership position in a structurally growing market.
The company benefits from certain network effects and faces several competitive threats at the same time. As the business profited from the move to online retail during the pandemic, as well as from the stimulus cheques handed out in the US, the stock price soared to absurd levels. As so often happens, however, the market had overcorrected by February and this quarter was offering prospective shareholders prices that assumed essentially zero growth in the business. When life gives you irrational sellers, make lemonade!”
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 140
Apple Inc. (NASDAQ:AAPL) designs, manufactures and markets smartphones, personal computers, tablets, wearables, and accessories. On November 17, the firm revealed that almost 52 million iPhones were shipped during the third quarter of 2022, nearly an eight million unit increase compared to the previous quarter and around one million unit increase compared to the same quarter in the previous year
On December 12, Oppenheimer analyst Marti Yang maintained an Outperform rating on Apple Inc. (NASDAQ:AAPL) stock and lowered the price target to $170 from $190, noting that no further COVID-related production capacity constraints are expected for Apple in 2023.
At the end of the third quarter of 2022, 140 hedge funds in the database of Insider Monkey held stakes worth $144 billion in Apple Inc. (NASDAQ:AAPL), compared to 128 in the previous quarter worth $143 billion.
In its Q2 2022 investor letter, Alger Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple Inc. (NASDAQ:AAPL) is a leading technology provider in telecommunications. computing and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives extremely tight engagement with consumers and enterprises. The engagement is fostering the growing purchase of high-margin services like music, apps, and apple pay. Apple’s shares detracted from performance as management lowered its guidance for the second quarter due to headwinds from the war in Ukraine, adverse foreign currency shifts, and dampened consumer demand associated with the coronavirus in China. Additionally, many investors were concerned that lockdowns implemented to curtail the spread of COVID-19 would impact the production of apple products, however, the manufacturing facilities have resumed activity.”
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 156
Alphabet Inc. (NASDAQ:GOOG) provides various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. On October 7, Alphabet’s Google reported that it had sold nearly 30 million Pixel phones just ahead of Pixel 7 launch. The company managed to see a 2x times growth in a year and managed to sell over 7 million units in a single year.
On November 30, Generale analyst Christophe Cherblanc maintained a Buy rating on Alphabet Inc. (NASDAQ:GOOG) stock and lowered the price target to $132 from $147, noting that for Alphabet, the issue is less about short-term cyclical pressures than delivering the scale benefits expected from a company with revenues of $280 billion in a progressively maturing online ecosystem.
At the end of the third quarter of 2022, 156 hedge funds in the database of Insider Monkey held stakes worth $19.3 billion in Alphabet Inc. (NASDAQ:GOOG), compared to 153 in the preceding quarter worth $22.3 billion.
In its Q3 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“In early January this year – which admittedly feels like eons ago – US President Joe Biden was pushing Americans to take up the government’s offer of free COVID tests to help tackle the surging omicron variant. How did Biden respond when citizens asked about the availability of these tests?
“Google it!”
This advice, undoubtedly well-meant, was roundly scoffed at by the press, however. It seemed too obvious to be very helpful.
Anyway, the anecdote serves to introduce you to one of our largest holdings, Alphabet; the parent company of Google. Note that first, Alphabet’s original and core product – its search engine – has entered our common vocabulary as a verb. ‘Googling’ something has the same meaning as ‘researching’ or ‘finding an answer to something. Second, the reason Biden’s advice was met with such opprobrium was that Googling something has become almost second nature to us now.
These two observations reveal a lot about Google’s strength in the search engine market, in which it has a share of over 90 percent. Because internet search is almost the prototypical network, Google has benefitted from – and we think is also protected by – the huge competitive advantage its scale brings – both to those asking the questions and those providing the answers. The Google search platform becomes increasingly useful to anyone seeking information as a greater volume of stuff becomes available. This starts a virtuous cycle that results in a colossal market share for Google itself. In the language of business strategists, Google benefits from vast network effects.
Because Google’s search results are viewed by billions of eyeballs every day, its search page ‘real estate is understandably very valuable to those with goods and services to sell. Advertising revenues from this ‘real estate as well as that from its other properties such as Mail, Maps, and so on, totalled almost USD 150b in 2021; amounting to almost 58% of the company’s revenues. Ad sales on YouTube, also owned by Alphabet, brought in another USD 28b. With the secular shift of the advertising spend to digital channels – over which Alphabet has a tight grip – we estimate the company has a share of around 40% of the digital advertising market and is probably the most valuable advertising property in the world…read more
1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 177
Meta Platforms Inc. (NASDAQ:META) develops products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, wearables, and in-home devices worldwide. On November 8, Meta Platforms announced Grand Teton, its next-generation hardware platform for AI training. Grand Teton features several improvements over the previous generation, including 2x the network bandwidth and 4x the host-to-GPU bandwidth.
On November 11, Morgan Stanley analyst Brian Nowak maintained an Equal Weight rating on Meta Platforms, Inc. (NASDAQ:META) stock and lowered the price target to $100 from $105, noting that signs of a weakening ad market continued to grow through the third quarter earnings season as most of the companies in the space either missed third quarter ad revenue expectations and/or guided to slower than expected forward growth.
On November 19, Meta AI unveiled a demo of Galactica, a large language model designed to “store, combine and reason about scientific knowledge.” While intended to accelerate writing scientific literature, adversarial users running tests found it could also generate realistic nonsense. After several days of ethical criticism, Meta took the demo offline.
On November 15, Morgan Stanley analyst Brian Nowak maintained an Equal Weight rating on Meta Platforms, Inc. (NASDAQ:META) stock and lowered the price target to $100 from $105, noting that signs of a weakening ad market continued to grow through third Quarter earnings season as the majority of companies being tracked in the space either missed third-quarter ad revenue expectations and/or guided to slower than expected forward growth.
At the end of the third quarter of 2022, 177 hedge funds in the database of Insider Monkey held stakes worth $14.2 billion in Meta Platforms, Inc. (NASDAQ:META), compared to 185 in the preceding quarter worth $18.2 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:META) was one of them. Here is what the fund said:
“Shares of Meta Platforms, Inc., the owner of Facebook, the world’s largest social network, fell 28.4% during the second quarter due to quarterly results that missed consensus estimates, driven by the impact of Apple’s new privacy changes in its iOS operating system. These changes have made it harder for Facebook to measure the effectiveness of its advertising across its mobile apps.
In the longer term, we expect Facebook to continue utilizing its leadership in mobile to provide global advertisers targeted marketing capabilities at scale, with substantial monetization optionality ahead in newer areas such as Reels (Meta’s competing solution to TikTok) and e-commerce.”
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