In this article, we’re going to talk about the 7 best American stocks to buy and hold in 2024.
Neutral Stance Amid Uncertainties
The tech sector has been showing positive performance amid market concerns, driven by improved earnings estimates and substantial investments in artificial intelligence. Approximately 40% of operating cash flow is currently allocated to AI, raising questions about when these investments will begin to yield returns. The strong profit margins of mega-cap stocks, averaging over 23%, compared to just over 8.5% for other sectors, suggest continued capital inflows into tech companies demonstrating earnings strength. While some consolidation and growth slowdown may occur, there is confidence that investor sentiment will eventually lead to a resurgence in these stocks.
As sentiments shift regarding major tech stocks, other profitable tech companies are maintaining positive momentum in the market. There was a conversation regarding this, covered a few days back in our article about the 10 Most Profitable NASDAQ Stocks To Invest In, where Jason Snipe, Odyssey Capital Advisors principal, discussed the tech sector’s mega-cap momentum, particularly in light of recent mega-cap stock downgrades and significant investor outflows. Here’s an excerpt from his sentiment:
“…This focus on AI has contributed to some recent downgrades but also suggests continued upside potential for select names within the sector.
…He acknowledged that while there may be some consolidation and a slowdown in growth, he believes that investors’ muscle memory will eventually lead to a resurgence in these stocks.
Snipe’s analysis underscores the complexities facing the tech sector amid market volatility and evolving economic conditions. While challenges persist, particularly with mega-cap stocks experiencing downgrades, there are also significant opportunities driven by innovation and strong profit margins that could support continued growth in this space…”
Katie Stockton, Fairlead Strategies founder, joined CNBC’s ‘Closing Bell’ on October 17 and highlighted that there’s a likelihood that the markets could move into choppier territory. Katie Stockton characterized her stance as neutral regarding the indices despite the strength of the trend and the participation of most stocks on the upside. She noted that while short-term momentum is currently positive, particularly behind major indices, there are concerns about potential problems if key players like NVIDIA falter. She highlighted that sentiment appears overly bullish or greedy, as evidenced by the Fear and Greed Index reaching an extreme level of 5%. This situation makes it challenging for the market to sustain overbought conditions, which are prevalent across various timeframes.
Stockton anticipates a pullback or possibly a more significant corrective phase in the fourth quarter for the S&P 500, suggesting that this could mark the beginning of a range-bound environment. She pointed to indicators such as the VIX, which has entered a new higher volatility cycle, and mentioned signs of long-term exhaustion indicated by the DeMark indicators, levels not seen collectively since late 2021. While this does not necessarily signal an impending bear market, it does enhance the likelihood of experiencing a choppier trading environment.
When asked about the recent performance of banks and cyclical stocks compared to defensive stocks, Stockton acknowledged that while there has been a positive move from the financial sector contributing to the S&P 500’s recent gains, it is too early to conclude that this represents a breakout in relative strength for financials. She indicated that most metrics suggest financials will likely perform in line with broader market trends rather than leading them. Furthermore, she expressed concern that mega-cap sectors are poised to lose their leadership position, which could pose challenges to overall market performance.
Regarding small-cap stocks, Stockton noted that while the Russell 2000 index made another attempt at an upside move, closing close to 2,300 with a 1.6% increase, long-term trends still indicate underperformance relative to the S&P 500. She pointed out that there has not been a breakout in the Russell 2000, which remains stalled below resistance levels established during summer highs. Consequently, she does not see actionable opportunities in small caps at this time and anticipates neutral trading conditions for this segment.
On the topic of bonds, Stockton mentioned that Treasury yields have shown some upside momentum but backed off recently. She sees potential entry points in Treasury bond proxies like TLT (iShares 20+ Year Treasury Bond ETF), suggesting signs of short-term downside exhaustion within a broader long-term uptrend for fixed income. She believes there is an opportunity for investors to enter Treasury bond proxies now, while also expecting yields to stall without significant long-term declines.
Her insights highlight her focus on maintaining balance amid prevailing uncertainties in both equity and bond markets. With that reminder put forward, we’re here with a list of the 7 best American stocks to buy and hold in 2024 to help you stay ahead of the upcoming market dynamics.
Methodology
To find the best American stocks, we used Insider Monkey’s proprietary database to find US stocks that were the most popular among elite hedge funds. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
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).
7 Best American Stocks To Buy and Hold in 2024
7. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 163
Visa Inc. (NYSE:V) is a global payments technology company that provides a range of payment solutions, operating a global payments network that connects businesses, consumers, financial institutions, and governments. Its products and services include credit cards, debit cards, prepaid cards, mobile payments, and electronic payments. It facilitates billions of transactions worldwide every day and is committed to providing secure, reliable, and efficient payment solutions.
The company’s global reach extends to over 200 countries with 4.5 billion cards in circulation. Recent expansions include Peru’s Yape super app and Vietnam’s digital wallets, adding millions of users. FQ3 2024 revenue reached $8.9 billion, a 9.57% year-over-year improvement, with global payments volume growing 7% (5% in the US). Its acquisition of Featurespace enhances fraud detection and risk-scoring capabilities. The company’s new Visa Commercial Solutions Hub aims to disrupt the $145 trillion commercial payments market by offering a unified platform for businesses and financial institutions.
Its VTAP platform, launched in October, enables banks to issue tokenized fiat currencies on blockchain networks, aimed to bridge the gap between traditional finance and blockchain technology. Visa Inc.’s (NYSE:V) acquisition of Featurespace, an AI-focused fraud detection firm, further strengthens its position as a secure and reliable payment provider. On October 16, it partnered with Analytics Partners to help retailers optimize their marketing budgets using AI-driven insights, aiming to improve retailers’ return on advertising spending through data-driven solutions.
Visa Inc.’s (NYSE:V) strong position in the global payments market, combined with its impressive financial performance and growth potential, makes it a compelling investment opportunity. The company’s resilience, high-profit margins, and expansion into emerging markets position it for continued success.
Aoris International Fund stated the following regarding Visa Inc. (NYSE:V) in its Q2 2024 investor letter:
“Visa Inc. (NYSE:V) operates the world’s largest payments network, which facilitates the movement of money between merchants, financial institutions, consumers, businesses, and governments.
The company is best known for enabling consumers to make debit and credit card payments. In the year to September 2023, 4.3 billion Visa cardholders made 213 billion transactions on its network, to a total value of US$12.1 trillion.
Compared to cash and cheques, which are still widely used around the world, Visa’s network is a more convenient, secure, and ubiquitous way for consumers to pay. Visa has invested to reduce friction and fraud in the payments experience, to the benefit of both merchants and consumers…” (Click here to read the full text)
6. NVIDIA Corp. (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corp. (NASDAQ:NVDA) is a global technology company that designs and manufactures GPUs, AI chips, and other computing technologies. The high-performance GPUs are widely used in gaming, professional graphics, and data centers, and also power AI applications, such as machine learning and deep learning.
The company’s stock has surged 2000% in 5 years due to GPU and AI-related demand. FQ2 2025 revenue soared 122.4% to $30 billion, with net income at $16.6 billion. Increased data center chip demand drove these results. Q3 revenue is projected at $32.5 billion. Blackwell and Hopper Architecture products are expected to perform well. On October 14, its stock hit a record high of $138.07 as the third week of this month began, driven by anticipation for AI infrastructure spending and the company’s dominant 70-95% market share in AI chips.
NetApp’s new AI tool leverages NVIDIA technology. Elon Musk’s xAI is using 100,000 NVIDIA H100 GPUs for its AI project, Colossal. The company has partnered with Accenture and Salesforce to accelerate AI innovation. Its Blackwell AI chip is in high demand, and its Aerial tool optimizes wireless networks. CUDA software provides a competitive edge. Future success depends on continued innovation and effective AI monetization.
Recently, the White House is considering expanding export limits for NVIDIA Corp. (NASDAQ:NVDA) along with AMD AI chips to certain Persian Gulf countries. This follows last year’s restrictions on China and other countries. The move aims to limit the Persian Gulf’s global influence over the AI industry.
The company reported that its Blackwell platforms are now fully operational, so the prior production challenges have been addressed. The company’s CEO believes its AI chip advantage is sustainable. Snowflake, a cloud data warehousing company using NVIDIA Corp.’s (NASDAQ:NVDA) AI Enterprise software, has seen its stock rise 10% due to strong prospects. Positive earnings, revised guidance, and upward stock movement suggest continued growth.
Vltava Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q3 2024 investor letter:
“Over the summer, we devoted a lot of time to studying the AI-related investment wave. This spans a wide range of sectors and our view could be very briefly summarised as follows: The first-tier beneficiaries are primarily companies in the semiconductor sector, NVIDIA Corporation (NASDAQ:NVDA) perhaps the most. That company is benefiting from the huge increase in investment by large technology companies to build enormous data centres. We know who NVIDIA’s customers are. They are companies like Meta, Alphabet, Amazon, and Microsoft. They are investing hundreds of billions of dollars into their AI capabilities. What is not entirely clear, however, is who are and will be the customers of NVIDIA’s customers, and, more importantly, when, and if, they will be able to come up with such huge demand for AI services that the profits from AI will justify and pay for the enormous investments all these companies have been making. The further we move away from the starting point that NVIDIA represents in our more broadly-reaching estimates, the lessreliable those estimates are.So far, we know just one thing for sure, and that is that investments in AI capabilities are ongoing and they are huge. They are not only bringing large demand to chipmakers and the semiconductor sector but to some other sectors as well. Indeed, building AI clusters also requires the construction of new semiconductor factories, new energy sources, and all the associated infrastructure. The numbers under consideration are incredibly high. It is possible that over the next decade the construction of AI centres will necessitate a 20% increase in US energy consumption. The investment required will be measured not in the hundreds of billions of dollars, but in an order of magnitude higher. Maybe two orders of magnitude.”
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) is a multinational technology company that designs, manufactures, and sells personal computers, smartphones, tablets, wearables, and various accessories and software, best known for its iconic products such as the iPhone, iPad, Mac, and Apple Watch. Its focus on user experience, innovative design, and ecosystem of products and services has made it one of the most valuable companies in the world.
The company’s FQ3 2024 revenue rose 4.87% as compared to the year-ago period, with services reaching a record $24.2 billion, up 14%. iPhone revenue was $39.3 billion, while Mac and iPad revenue grew 2% and 24%, respectively. iPhone 16 shipments are lower than last year, with shorter wait times for Pro Max models. Initial iPhone 16 series pre-orders are down 12.7%. Overall, iPhone 16 Pro models have largely met expectations but the base model and 16 Plus have not matched last year’s figures.
Despite initial iPhone 16 demand concerns, the company’s stock rose 3% in two days, reaching its highest close since July, as reported this Tuesday, October 14. Analysts are optimistic about Apple Intelligence’s potential to drive a “stronger-for-longer” upgrade cycle, with price targets reaching $265. However, recently, Huawei has surpassed Apple Inc. (NASDAQ:AAPL) as the leading smartphone brand in China, driven by factors such as nationalism, economic conditions, and trade restrictions on Huawei, causing sales to decline for Apple Inc. (NASDAQ:AAPL).
Its AI tool, Apple Intelligence, could boost demand in the US market. Apple Inc.’s (NASDAQ:AAPL) long-term decline in mobile carrier upgrade rates raises concerns about the impact of Apple Intelligence on device upgrade cycles. Despite potential challenges related to iPhone upgrade cycles and the services business, strong brand recognition, innovative product lineup, and expanding ecosystem position the company for continued growth.
Vltava Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q3 2024 investor letter:
“You probably have not missed the news that Warren Buffett has already sold half the stock from his largest public markets investment, Apple Inc. (NASDAQ:AAPL). It was a phenomenal investment for Berkshire. Over the course of seven years or so, it brought a profit of well over USD 100 billion. Apple comprised a very large position within Berkshire’s public portfolio, and this was the reason we avoided Apple stock outright during that time. We considered our exposure to Apple through our holdings of Berkshire stock to be sufficient, and we ended up making a lot of money on it. There has been a great deal of speculation in the market about what Buffett’s sale of Apple signals regarding his view of the stock market. I think the reason for the sale is much simpler. Buffett probably considers Apple stock so expensive that he prefers to cash in at 20% less (after all, Berkshire must pay tax on its profits). He started selling in the first quarter of the year. When I was in Omaha for the general meeting in May, Buffett said he was still selling, and I expect he continued to do so in the third quarter. I have to say that, as a Berkshire shareholder, I am happy about the Apple sale. I think Berkshire’s management will find a better use for this money, as they always have in the past. It is quite likely that they already have a very specific idea about this. If that takes two or three years, it does not matter at all. This is not a race and, in the meantime, the risk of holding Berkshire Hathaway stock itself has been greatly reduced.”
4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 216
Alphabet Inc. (NASDAQ:GOOGL) is a technology conglomerate that holds a majority stake in Google, managing its diverse range of businesses, which include Google Search, Google Cloud, YouTube, Waymo, and Verily, with a primary focus on innovation and organizing the world’s information, making it universally accessible and useful.
Google Cloud revenue increased by 28.8% in the second quarter of 2024, contributing to a 13.59% overall revenue growth. Google’s ad revenue increased to $48.5 billion in Q2, accounting for almost 60% of the company’s sales for the quarter. Besides Google, YouTube’s ad sales increased to $8.7 billion. Net income was $23.6 billion.
In October, Google, along with Amazon and Microsoft, is investing in nuclear power to meet the growing energy demands of their data centers, fueled by the expansion of AI services. These tech giants are seeking clean energy alternatives to reduce their carbon footprints and support their sustainability goals. Nuclear power is seen as a promising option due to its reliability and ability to provide large-scale energy production.
The company’s ambitious future is further strengthened as we see that Bill Ackman, a renowned investor, has invested over 20% of his portfolio in Alphabet Inc. (NASDAQ:GOOGL). Wall Street analysts are also bullish on Alphabet Inc. (NASDAQ:GOOGL), predicting a 20% increase in its stock price within the next year.
AI infrastructure and GenAI tools have generated billions in revenue year-to-date, used by over 2 million developers. Google, dominating the search engine market (91.06%), plans to invest $50 billion in AI by 2024. Alphabet Inc.’s (NASDAQ:GOOGL) dominance in search, growing cloud business, and AI investments position it for continued success. Strong financials and positive analyst sentiment make it a promising investment option.
Patient Capital Opportunity Equity Strategy stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q2 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOGL) was a top contributor in the second quarter, finally catching up to its peers in the Magnificent 7. The company gained 20.8% in the period following strong first quarter earnings, a new $70B repurchase program (3% of shares outstanding) and the initiation of a cash dividend ($0.20 per share; 0.42% yield). We continue to believe the market underappreciates Google’s exposure to AI with its Gemini model being integrated into search results, YouTube advertising and its cloud offering. We continue to think that the cloud players will be the AI winners in the long-term, with Google being well positioned to take advantage. While the company trades at 24x 2024 earnings, if you remove the money-losing and under-earning businesses, you realize that you are paying below a market multiple for the core Google business. We do not believe there are many other AI winners trading at such an attractive multiple.”
3. Meta Platforms Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 219
Meta Platforms Inc. (NASDAQ:META) is a multinational technology company that focuses on social media and online communication, best known for its flagship social networking platform, Facebook. It also owns other popular social media apps like Instagram, WhatsApp, and Messenger. The mission is to connect people around the world and build communities.
The company’s AI-enhanced advertising and business user monetization led to Q2 2024 ad growth twice that of Google, despite higher ad costs. Daily active users rose 7%, while earnings per share surged 73% and revenue increased 22.10% year-over-year. This growth was driven by a 10% increase in ads served and cost per ad. It acquired 600,000 Nvidia H100 GPUs and is developing its own AI chip.
Its Reality Labs division is driving immersive experiences with products like the Meta Quest VR headset and Ray-Ban smart glasses. The company’s AI language model, Llama, is poised to enhance hardware-social media integration. Recent updates to Ray-Ban Meta glasses have boosted sales, and a renewed partnership with EssilorLuxottica signals a strong commitment to smart eyewear technology. In October, it launched features designed to help young adults discover new interests and connect with like-minded people.
Driven by a robust user base, cutting-edge AI, and sophisticated advertising, the company is rapidly expanding. A commitment to innovation, including a strategic push into the metaverse, positions it for continued success. AI-powered products, such as Meta AI and Meta Smart Glasses, offer users unparalleled experiences.
Here’s what Mar Vista Investment Partners, LLC said about Meta Platforms, Inc. (NASDAQ:META) in its Q2 2024 investor letter:
“During the quarter, we established new investments in Broadcom and Meta Platforms, Inc. (NASDAQ:META). We previously divested from Meta during a period of stagnant advertising growth and the company’s initial, significant investment in the metaverse project. At that time, investors appeared complacent to the risks associated to an increasingly competitive landscape, and the Street’s robust financial expectations as the company transitioned towards monetizing short-format video (Reels). The subsequent decline in Meta’s stock price during 2022 reflected these concerns.
2. Microsoft Corp. (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corp. (NASDAQ:MSFT) develops, licenses, and supports computer software, consumer electronics, and personal computers. It makes revenue by designing and selling hardware, and by delivering relevant online advertising to a global customer audience.
FQ4 2024 was a success for the company, with revenue up 15.20%, driven by Microsoft Cloud revenue up 21% due to record bookings. Individual Office sales were up 4%, and Dynamics ERP and CRM software sales grew 19%. Bing saw a 3% increase. Azure revenue surged by 30%. Partnerships with Lumen Technologies and Palantir strengthen its AI leadership and cloud capabilities.
The company recently settled a lawsuit filed by a group of gamers who opposed the company’s acquisition of Activision Blizzard. The terms of the settlement were not disclosed, but both parties agreed to dismiss the lawsuit and cover their own costs. This marks the end of a lengthy legal battle that raised concerns about competition in the video game industry.
As October began, Placing Platform Limited (PPL) partnered with Microsoft Corp. (NASDAQ:MSFT) to enhance its specialty insurance trading platform. Through this collaboration, PPL will integrate the company’s data and AI capabilities to create a more efficient and data-driven trading platform. Key features include the development of a productivity tool, an intelligent data hub, and enhanced collaboration features.
The company’s recent healthcare AI innovations offer a promising but risky investment opportunity, with the potential for high growth but challenges in a competitive and regulated market. Microsoft Corp.’s (NASDAQ:MSFT) continued investment in AI and cloud infrastructure positions it as a market leader. Its strong financials, robust cloud growth, and positive outlook make it a promising investment option.
Generation Investment Management Global Equity Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:
“Generative AI’s hunger for power has increased disproportionately with its intelligence. According to one estimate, OpenAI’s GPT-4 required 50 gigawatt hours (GWh) of electricity to train, much more than the 1.3 GWh needed for GPT-3.3 And then AI requires even more power when it is put to use (so called ‘inference’). Some of the latest trends worry us. Microsoft Corporation (NASDAQ:MSFT) appears to be slipping in its ESG goals, with its greenhouse gas emissions rising again last year, as it invests in becoming a big player in AI. It is struggling in particular to curb its Scope 3 emissions in the capital goods category – nowhere more so than in the activity associated with the construction of data centres: both the embedded carbon in construction materials like steel and cement, as well as the emissions from the manufacturing of hardware components such as semiconductors, servers and racks. Google’s emissions have risen by close to 50% in the past five years.
We feel it is worth dwelling on Microsoft for a few moments, since we suspect you will be hearing a lot more about the relationship between AI and sustainability in the coming months. The bottom line is that we continue to see Microsoft as a sustainability leader. In the case of Scope 2 emissions, the company covers 100% of its electricity use with purchases of renewable energy. Crucially, though, the majority of this green energy is directly sourced via power purchase agreements, which bring new renewable capacity to the grid. Microsoft is also committed to operating 24/7 on renewable power by 2030, a policy that will help bring energy storage onto the grid as well…” (Click here to read the full text)
1. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon.com Inc. (NASDAQ:AMZN) is a multinational technology company that revolutionized e-commerce, offering a vast selection of products, from books and electronics to groceries and clothing. Beyond retail, it provides cloud computing services through AWS, streaming content through Prime Video, and offers voice-enabled smart devices powered by Alexa.
In the second quarter of 2024, the company saw a 10.12% jump in revenue as compared to the year-ago period, driven by a 19% rise in AWS and $14.7 billion in operating income. The company now expects continued growth of 8-11% in Q3 2024. It has poured $30.5 billion into AI this year, with plans to increase spending. This reflects the growing demand for generative and non-generative AI.
The company partnered with Databricks for a five-year deal to create a data warehouse startup using Amazon.com Inc.’s (NASDAQ:AMZN) Trainium AI processors. This will help businesses develop AI models more efficiently and cost-effectively, leveraging the benefits of Amazon.com Inc.’s (NASDAQ:AMZN) AI chips.
On October 16, it introduced a new Kindle device with a color display, the Kindle Colorsoft. This is a significant update as the company has been criticized for lacking a color e-reader. Additionally, the Kindle Scribe now has AI features for summarizing notes, and the Kindle Paperwhite has been slimmed down while maintaining its long battery life.
Its diverse business model, led by its dominant cloud division and growing advertising segment, positions it for continued success. Record-breaking Prime sales further solidify its position as a leading e-commerce and technology giant, making Amazon.com Inc. (NASDAQ:AMZN) a strong investment option.
Meridian Hedged Equity Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is a global technology company that operates e-commerce, cloud computing, digital advertising, and other businesses. We own Amazon because we believe it is well-positioned to benefit from several strong secular trends, including the shift to online shopping, the growth of cloud computing, and the increasing importance of digital advertising. The company exceeded expectations in the first quarter, with cloud-computing revenue growth accelerating, driven by easing cost optimization pressures and the ramp of generative AI workloads. The North American retail segment drove record operating margins, highlighting the success of Amazon’s efforts to improve efficiency and lower its cost to serve. International retail also showed promise, as emerging markets steadily progressed towards profitability. Given the strength across these key segments, we continue to hold the position in the company.”
While we acknowledge the growth potential of Amazon.com Inc. (NASDAQ:AMZN), 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 AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
