In this article, we will discuss the 7 Best Big Company Stocks to Buy Now.
Mega-cap stocks—major technology companies to be precise—continued to drive a disproportionate share of the total US stock market returns. Market experts believe that from 2023 beginning to May 2024 end, only a handful of the biggest and most well-established technology companies drove ~60% of the S&P 500’s 40%+ gain.
FactSet reported that, for 2Q 2024 (with 93% of S&P 500 companies publishing actual results), ~79% of the S&P 500 companies reported positive EPS surprises. On the other hand, ~60% of S&P 500 companies reported positive revenue surprises. In 2Q 2024, semiconductor companies’ stocks were the critical drivers for the S&P 500 Index. The AI themes supported other sectors, like utilities, seeking support from higher electricity demand for AI data centers.
3Q 2024 Earnings Season – A Preview
Wall Street experts believe that estimates for 3Q 2024 have seen a decline and the magnitude of estimate cuts seems to be significantly bigger than compared to the comparable periods of the first 2 quarters of 2024. Market participants opine that total S&P 500 earnings should see an increase of 3.9% from the same period of last year on 4.7% revenue growth. These estimates have come down since the beginning of the period, as the current 3.9% growth had fallen from 6.9% at the beginning of July.
The decline in estimates stems from the risks associated with economic downside, slower disinflation, expectations for higher-for-longer rates, and increased geopolitical risks. Apart from these risks, the uncertainty around the US Presidential elections remains the most important factor responsible for the decline in estimates.
Wall Street analysts believe that uncertainty surrounding the US presidential election is expected to rise as the November vote draws closer. This can act as an additional headwind in the environment already demonstrating signs of losing momentum.
Reuters reported that populism, polarization, and an expected tight race can result in a surge in the economic policy uncertainty index (EPU). This is a news-headline-based index, which was created by economics professors Steven J. Davis, Scott R. Baker, and Nick Bloom. The rise in EPU takes place when an uncertain outlook about government policy prompts consumers to delay their spending and forces businesses to put a halt on investment and hiring.
Brandywine Global Investment Management (A Franklin Templeton Company), an investment management firm, believes that this might be happening in the current environment. The firm noted that the University of Michigan’s current economic conditions index remains below the expectations index. Notably, this is a rare occurrence, suggesting that consumers are anxious.
Amidst Worries, Investors Should Stick to Big Company Stocks
Analysts at Brandywine Global believe that this year’s election cycle, whether warranted or not, continues to impact the US consumer, which in turn, is impacting the corporate sector.
In the 2020 follow-up working paper, Davis (the co-founder of the EPU index) and his colleagues revealed that the EPU index tends to increase by ~18% in the month of November during a Presidential election. When elections come close, and there is a winning margin of less than 5%, and polarized, the EPU index can jump by ~28% in election month.
Political uncertainty can be a more powerful factor in asset prices, with investors focusing on the US Presidential elections. A JPMorgan survey revealed that investors continue to see political risk in the US and abroad as the top destabilizing metric for equities.
AI fever coupled with strong earnings has supported broader equities in 1H 2024, and gains have been concentrated in technology and growth stocks. Analysts opine that some investors are still looking for areas of the market that have underperformed, and they expect that the recent rally in tech might spread into other sectors as well. Most investors welcomed the signs of a slowdown in inflation and moderation in growth. As a result, the US Fed has hinted to cut key interest rates. With uncertainties looming, market experts believe that investors should stick to the big stocks, which have a healthy track record of delivering strong gains.
A portfolio manager studying a computer monitor to make informed decisions about investments.
Our methodology
To select the 7 Best Big Company Stocks to Buy Now, we used the Yahoo Finance and Finviz stock screeners to filter stocks with biggest market caps from different industries. Next, we narrowed our list by selecting the big and well-established companies that were the most popular among elite hedge funds. Finally, the stocks were ranked in the ascending order of their hedge fund sentiment.
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 Big Company Stocks to Buy Now
7) Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 100
Eli Lilly and Company (NYSE:LLY) is a drug firm, which is focused on neuroscience, endocrinology, cancer, and immunology.
Eli Lilly and Company (NYSE:LLY) appears to be well-placed for strong growth over the medium term. The drivers include patents, economies of scale, and its strong distribution network. The company has patent-protected drugs, which carry premium pricing power. As a result, it can generate returns on invested capital over its cost of capital. Eli Lilly and Company (NYSE:LLY)’s manufacturing capabilities allow it to develop products efficiently and at scale, which should help in enhancing market share and profitability.
While Wall Street believes that the potential of Mounjaro (diabetes) and Zepbound (obesity) should support the company, there are opportunities in heart disease, obstructive sleep apnea, and liver disease that are quite undervalued.
Bank of America Corporation (NYSE:BAC) believes that the recent addition of label expansions for tirzepatide in weight loss should help the company surpass $60 billion in the top line by 2030. This implies a strong increase from $15 billion in 2024. Eli Lilly and Company (NYSE:LLY)’s strong leadership in weight loss is expected to drive industry-leading growth given its approved drugs and well-positioned next-gen drugs that remain in the pipeline.
In 2Q 2024, Eli Lilly and Company (NYSE:LLY)’s revenue went up by 36% as a result of Mounjaro, Zepbound, and Verzenio. When $579.0 million of revenue from the sale of rights for Baqsimi in 2Q 2023 was excluded, revenue in 2Q 2024 saw an increase of 46%. The company’s 2024 full-year revenue guidance has been raised by $3 billion to between $45.4 billion – $46.6 billion, primarily because of the strong performance of Mounjaro and Zepbound, and its non-incretin medicines. The company has increased its reported EPS guidance by $2.05 to the range of $15.10 – $15.60.
Analysts at Berenberg Bank upped their target price on the shares of Eli Lilly and Company (NYSE:LLY) from $1,000.00 to $1,050.00, giving it a “Buy” rating on 14th August. Baron Funds, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“Shares of global pharmaceutical company Eli Lilly and Company (NYSE:LLY) increased on continued investor enthusiasm around GLP-1 drugs for diabetes and obesity. We remain shareholders. Lilly’s Mounjaro/Zepbound not only offers superb blood sugar control for diabetics but can drive 20%-plus weight loss and likely improve cardiovascular outcomes in both diabetic and non-diabetic obese patients. Lilly is developing next generation drugs, including retatrutide, which drives approximately 25% weight loss, and orforglipron, a daily pill that produces approximately 15% weight loss. In the U.S. alone, there are 32 million Type 2 diabetics and an additional 105 million obese patients who we estimate would qualify for GLP-1 drugs. Although supply and access are limited near term, we think GLP-1 drugs will become standard of care for both diabetes and obesity and will become a $150 billion-plus category. We see Lilly setting a high efficacy bar and capturing significant long-term market share. We think the adoption of GLP-1s will drive Lilly to triple total revenue by 2030.”
6) JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 111
JPMorgan Chase & Co. (NYSE:JPM) offers global financial services and retail banking. It provides services like investment banking, treasury and securities services, asset management, card member services, and related services.
JPMorgan Chase & Co. (NYSE:JPM)’s cost advantages and switching costs are expected to act as critical tailwinds over the medium term. The financial services giant continues to focus on investing in organic expansion opportunities and distribution platforms. Collectively, these measures are expected to support its share price growth over the next decade and further strengthen its competitive position.
Wall Street analysts believe that JPMorgan Chase & Co. (NYSE:JPM) is prepared for “higher-for-longer” interest rates. If the rates continue to increase, it has a significant liquidity position which can help the company to capitalize on interest rates or pursue deals stemming from higher-for-longer rates. On the contrary, if the rates decline, the bank should benefit from higher lending. This is because a decline in interest rates can lead to increased loan activity.
JPMorgan Chase & Co. (NYSE:JPM) released its 2Q 2024 financial results, with net revenue coming at $51.0 billion, exhibiting an increase of 20%. The company’s net interest income came in at $22.9 billion, up by 4%. The company’s NII was supported by the impact of the balance sheet mix and higher rates, increased revolving balances in Card Services, and one additional month of First Republic-related net interest income. These impacts were largely offset by deposit margin compression throughout the LOBs and lower deposit balances in CCB.
Analysts at Piper Sandler upped their price target on the shares of JPMorgan Chase & Co. (NYSE:JPM) from $220.00 to $230.00, giving it an “Overweight” rating on 15th July. As of the second quarter, 111 hedge fund managers had invested in the company and the stakes amounted to $6.97 billion.
Carillon Tower Advisers, an investment management company, released its first quarter 2024 investor letter and mentioned JPMorgan Chase & Co. (NYSE:JPM). Here is what the fund said:
“JPMorgan Chase & Co. (NYSE:JPM) contributed positively to performance following solid financial results and positive guidance for the remainder of 2024. Moreover, growing chatter around rising capital markets activity likely contributed to the stock’s strong performance relative to other banks. Recall that JPMorgan has a robust capital markets franchise.”
5) NVIDIA Corporation (NASDAQ:NVDA)
Number of hedge fund holders: 179
NVIDIA Corporation (NASDAQ:NVDA) is the designer of discrete graphics processing units that enhance the experience on computing platforms. Its chips are used in several end markets, such as high-end PCs for gaming, data centers, and automotive infotainment systems.
NVIDIA Corporation (NASDAQ:NVDA) has been making investments for over a decade in its software capabilities in a unique way which has enabled its hardware to outperform regular silicon. This outperformance was seen because of software optimizations and acceleration libraries as these are regularly updated. GenAI continues to drive data center growth. The next-gen models require 10x-20x more compute and data, and this is where NVIDIA Corporation (NASDAQ:NVDA)’s extremely powerful chips come to the rescue.
Undoubtedly, the company’s strong position related to graphics processing units, and switching costs associated with its proprietary software, CUDA platform, for AI tools should act as critical growth enablers. NVIDIA Corporation (NASDAQ:NVDA)’s GPUs and software platforms should capitalize on the elevated demand for its AI applications, mainly in data centers where high-performance computing remains important. Spectrum-X, which is a high-performance Ethernet platform, has been gaining traction. Also, sovereign AI opportunities are expanding, with more and more countries prioritizing AI development.
For 3Q 2025, NVIDIA Corporation (NASDAQ:NVDA) expects revenue of $32.5 billion, plus or minus 2%. During 1H 2025, the company returned $15.4 billion to shareholders via shares repurchases and cash dividends.
Analysts at JPMorgan Chase & Co. increased their target price on shares of NVIDIA Corporation (NASDAQ:NVDA) from $115.00 to $155.00, giving an “Overweight” rating on 29th August. Ithaka Group, an investment advisory firm, released its second-quarter 2024 investor letter. Here is what the fund said:
“NVIDIA Corporation (NASDAQ:NVDA) is the market leader in visual computing through the production of high-performance graphics processing units (GPUs). The company targets four large and growing markets: Gaming, Professional Visualization, Data Center, and Automotive. NVIDIA’s products have the potential to lead and disrupt some of the most exciting areas of computing, including: data center acceleration, artifi cial intelligence (AI), machine learning, and autonomous driving. The reason for the stock’s appreciation in the quarter was twofold: First, the stock benefi ted from tremendous excitement surrounding the further development of generative AI and the likelihood this would necessitate the purchase of a large number of Nvidia’s products far into the future; Second, Nvidia posted another strong beat[1]and-raise quarter, where the company upped its F2Q25 revenue guidance above Street estimates, showcasing its dominant position in the buildout of today’s accelerated computing infrastructure.”
4) Apple Inc. (NASDAQ:AAPL)
Number of hedge fund holders: 184
Apple Inc. (NASDAQ:AAPL) designs, manufactures, markets, and sells smartphones, personal computers, tablets, wearables, and related accessories.
High customer switching costs, intangible assets, and network effects around the company’s iOS ecosystem continue to strengthen Apple Inc. (NASDAQ:AAPL)’s competitive positioning. The company is expected to be supported by a higher mix of premium products. These include iPhone Pro models which should help improve gross margins moving forward. The market is quite optimistic about its new product, the iPhone 16, and the launch of Apple Intelligence. Generative AI acts as a perfect fit for the seamless experience of using iOS products.
Apple Inc. (NASDAQ:AAPL)’s attached services – which include App Store, iCloud, Apple TV+, Apple Music, and Apple Pay – help the company realize higher margins and a recurring revenue stream which should help improve the value proposition for hardware products, and the financial profile. Apple Intelligence is expected to drive accelerated product upgrade cycles and should result in increased demand for Apple services. The company’s investment in AI, with the launch of the new Apple Intelligence platform, should accelerate its future growth by improving user experiences throughout its ecosystem.
The company released results for 3Q 2024, with revenues reaching $85.78 billion (a record). This exhibits a rise of 5% on the YoY basis. This growth primarily stemmed from a 14% growth in services revenue, which touched an all-time high of $24.21 billion. Services such as iCloud, Apple Music, and the App Store have supported the tech giant in achieving financial success, exhibiting its ability to perform well even in a challenging environment.
Bank of America reissued a “Buy” rating on the shares of Apple Inc. (NASDAQ:AAPL), giving it a price target of $256.00 on 5th September 2024. As per Insider Monkey’s 2Q 2024 data, 184 hedge funds were long Apple Inc. (NASDAQ:AAPL).
Baron Funds, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“The Fund’s chief relative detractor was Apple Inc. (NASDAQ:AAPL), even though it was a meaningful contributor to absolute performance, as we added to our Apple position significantly during the period. We bought Apple well, but in 20/20 hindsight we didn’t buy enough. Because Apple has an oversized weight in the Benchmark (its average weight was 15.7% for the period), when Apple’s stock outperforms (it appreciated 23.0%), it has generally been a headwind to relative performance. Our Apple underweight accounted for 33% of our relative underperformance for the period.
This quarter we increased the size of our position in Apple Inc., a leading technology company known for its innovative consumer electronics products like the iPhone, MacBook, iPad, and Apple Watch. Apple is a leader across its categories and geographies, with a growing installed base that now exceeds 2 billion devices globally. The company’s attached services – including the App Store, iCloud, Apple TV+, Apple Music, and Apple Pay – provide a higher margin, recurring revenue stream that both enhances the value proposition for its hardware products and improves the financial profile. Apple now has well over 1 billion subscribers paying for these services, more than double the number it had just 4 years ago. The increasing services mix has led to healthy operating margin improvement, providing more free cash flow for Apple to reinvest in the business and to distribute to shareholders. Throughout its 48-year history, Apple has successfully navigated and capitalized on major technological shifts, from PCs to mobile to cloud computing. We believe the company’s leading brand and device ecosystem position it to do equally well in the AI age, and this was the driver of our decision to re-invest. “Apple Intelligence” – the AI strategy unveiled at Apple’s recent Worldwide Developer Conference – leverages on-device AI and integrations with tools like ChatGPT to enhance user experiences across its ecosystem. The AI suite enables users to create new images, summarize and generate text, and use Siri to perform actions across their mobile applications, all while maintaining user privacy and security. We think Apple Intelligence can drive accelerated product upgrade cycles and higher demand for Apple services. The combination of growth re-acceleration, increasing services contribution, and thoughtful capital allocation should continue driving long-term shareholder value.”
3) Alphabet Inc. (NASDAQ:GOOGL)
Number of hedge fund holders: 216
Alphabet Inc. (NASDAQ:GOOGL) is a holding company and the internet media giant, Google, is its wholly-owned subsidiary.
The company enjoys durable competitive advantages associated with intangible assets and its network effect. Alphabet Inc. (NASDAQ:GOOGL)’s technological expertise associated with algorithms and AI, together with access to and accumulation of valuable data for advertisers should act as tailwinds. Next, its search engine is well-regarded and appreciated across the industry players. YouTube is expected to benefit from robust reach and usage frequency. Its video-only content format continues to be appealing to brand advertisers, which should support Alphabet Inc. (NASDAQ:GOOGL) over the next decade.
Wall Street analysts believe that the market underappreciates Alphabet Inc. (NASDAQ:GOOGL)’s exposure to AI, given the fact that its Gemini model continues to be integrated into search results, YouTube advertising, and its cloud offerings. As we all know, cloud players are expected to be the AI winners over the long-term, and Alphabet Inc. (NASDAQ:GOOGL) is well-positioned to take advantage.
Alphabet Inc. (NASDAQ:GOOGL) released its 2Q 2024 results, with the performance supported by ongoing strength in Search and momentum in Cloud. The company’s longstanding infrastructure leadership, coupled with in-house research teams, should help the tech giant to pursue opportunities ahead.
Analysts at TD Cowen initiated coverage on the shares of Alphabet Inc. (NASDAQ:GOOGL), increasing its price target from $200.00 to $220.00. They gave a “Buy” rating on 10th July.
Patient Capital Management, a value investing firm, released its second quarter 2024 investor letter. Here is what the fund said:
“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.”
2) Meta Platforms, Inc. (NASDAQ:META)
Number of hedge fund holders: 219
Meta Platforms, Inc. (NASDAQ:META) operates as a social technology company. It builds applications and technologies that help people connect, locate communities, and grow businesses.
Considering the company’s network effects concerning its massive user base, and intangible assets consisting of a massive collection of data users have shared on the company’s sites and apps, Meta Platforms, Inc. (NASDAQ:META) appears to be well-placed for strong and stable growth over the medium term. Considering the company’s capability to profitably monetize its network through advertising, the company should comfortably generate excess returns on capital for the foreseeable future.
Meta Platforms, Inc. (NASDAQ:META)’s ad revenue per user continues to grow. This demonstrates that advertisers are seeing value in working with the firm. The company has strategically accumulated data about everyone via Facebook and/or Instagram accounts, which are benefiting the advertisers in some form or the other. In 2Q 2024, the company’s average price per ad went up by 10% YoY. The company continues to incorporate AI technology into its various offerings and focuses on launching VR products, which should enhance user engagement and drive further growth in advertising revenue.
In 2Q 2024, Meta Platforms, Inc. (NASDAQ:META)’s advertising revenue increased $6.83 billion, or 22% on the YoY basis because of growth in ad impressions delivered and average price per ad. The growth in ad impressions delivered was mainly because of an increase in users and their engagement with the company’s products. For 3Q 2024, it expects total revenue in the range of $38.5 billion – $41 billion.
Wolfe Research initiated coverage on shares of Meta Platforms, Inc. (NASDAQ:META) on 16th July. They issued an “Outperform” rating and gave the price target of $620.00. Mar Vista Investment Partners, LLC, an investment management company, released second quarter 2024 investor letter. Here is what the fund said:
“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.
Since then, Meta has demonstrably shifted its strategic focus. The company has prioritized operational efficiency, implemented strategies to monetize Reels effectively, and initiated a robust artificial intelligence (AI) development program. We believe the focus on AI represents a more prudent capital allocation strategy compared to the earlier metaverse initiative. Meta AI holds significant potential to unlock substantial monetization opportunities and enhance user engagement, while maintaining tight controls on operating costs…” (Click here to read the full text)
1) Microsoft Corporation (NASDAQ:MSFT)
Number of hedge fund holders: 279
Microsoft Corporation (NASDAQ:MSFT) develops and licenses consumer and enterprise software. The company is known for its Windows operating systems and Office productivity suite.
Given its investment in OpenAI, Microsoft Corporation (NASDAQ:MSFT) emerged as a leader in AI. The company continues to upsell users on premium-priced Office 365 versions to include advanced telephony features. The company transitioned to a subscription model for its Microsoft 365 software. Therefore, if anyone wants to use its suite of apps – such as Word, PowerPoint, and Excel – they will be tied in its ecosystem for several years.
Microsoft Corporation (NASDAQ:MSFT)’s cloud business is the largest and fastest-growing segment, and this business is well-placed to drive total growth as AI capacity comes online.
Cost-cutting initiatives in corporate America have also been implemented. This means that cost optimization headwinds, which were impacting Azure’s growth, are now over. Separately, its new AI-productivity tool, Copilot, is being employed by ~60% of Fortune 500 companies. Therefore, it should be able to hold a leading position in AI.
Microsoft Corporation (NASDAQ:MSFT) has announced results for 4Q 2024, with revenue reaching $64.7 billion, up by 15% (and up 16% in constant currency) and operating income coming at $27.9 billion (up 16% in constant currency). The company’s quarterly results were aided by revenue increases across Productivity and Business Processes, Intelligent Cloud, and More Personal Computing.
Analysts at Truist Financial reaffirmed a “Buy” rating on the shares of Microsoft Corporation (NASDAQ:MSFT), giving the company a price target of $600.00 on 17th June. According to our database, 279 hedge funds held stakes in the company in the second quarter, with positions worth $89.06 billion.
Fred Alger Management, an investment management company, released its second quarter 2024 investor letter. Here is what the fund said:
“Microsoft Corporation (NASDAQ:MSFT) is a beneficiary of corporate America’s transformative digitization. The company operates through three segments: Productivity and Business Processes (Office, LinkedIn, and Dynamics), Intelligent Cloud (Server Products and Cloud Services, Azure, and Enterprise Services), and More Personal Computing (Windows, Devices, Gaming, and Search). During the quarter, shares contributed to performance after the company reported strong fiscal third quarter results, underscoring its leadership position in the cloud and highlighted its role as a primary facilitator and beneficiary of AI adoption. Company revenue growth, operating margin, and earnings growth surpassed consensus expectations. The utility scale Azure cloud business grew 31% in constant currency of which 7% was AI related versus 3% two quarters ago. Further, management noted most of the AI revenue continues to stem from inference rather than training indicating high quality AI applications by Microsoft’s clients. Management also indicated that the significant cost-cutting programs in corporate America are done, suggesting that the cost optimization headwinds previously impacting Azure’s growth are over. Separately, management provided color on their new AI-productivity tool, Copilot, noting that approximately 60% of Fortune 500 companies are already using Copilot, and that the quarter witnessed a 50% increase in Copilot assistance integration within Teams. We continue to believe that Microsoft has the potential to hold a leading position in AI, given its innovative approach and demonstrated high unit volume growth opportunity.”
While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than the ones mentioned on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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