In this article, we’ll explore the 7 Best Fast Money Stocks To Buy According To Hedge Funds.
As the financial world grapples with shifting economic indicators and political uncertainty, insights from leading experts offer a crucial perspective on what lies ahead. With inflation showing signs of easing and the Federal Reserve signaling a likely rate cut, the focus now shifts to earnings performance and broader economic trends. Adding to this complexity are political developments, such as the possibility of a Republican sweep.
The latest June 2024 inflation report revealed a softer-than-expected outcome, causing varied reactions across major stock indices. Initially, futures surged in response, but have since fluctuated. Currently, the Dow is showing gains, the S&P is up slightly, and the NASDAQ is just below the flatline. Inflation dropped by a tenth of a percent month-over-month, contrary to economists’ forecasts of a rise.
Chris Harvey, Head of Equity Strategy at Wells Fargo Securities, and Mike Feroli, Chief U.S. Economist at JPMorgan, shared their perspectives on the current financial situation in an episode of CNBC’s Fast Money. Chris Harvey is cautious about the concept of market rotation due to ongoing uncertainties about earnings. While he doesn’t oppose rotation, he pointed out that investor confidence is still shaky.
“That’s right. We’re not against rotation; we’re just waiting for more clarity. Many investors are uncertain about earnings. Until we see a situation where companies don’t go down on bad news, we won’t be fully convinced about the rotation. We want people to believe that numbers will improve and that things will get better. However, right now, bad news is bad news, and that suggests the rotation may not be sustainable.”
In contrast, Mike Feroli discussed the anticipated rate cuts. He believes that the Fed is likely to lower rates soon due to its more aggressive stance. Feroli suggests that the economy is weaker than some might think, which supports the expectation of rate cuts. He noted that we have probably reached the peak for interest rates and that future attention will shift to earnings performance.
Feroli also explained why he updated his forecast to September. This change is based on recent CPI data showing significant inflation drops over the past year and a rise in unemployment. He expects the Fed to begin cutting rates in September, with additional cuts likely on a quarterly basis.
“Yes, the rate cuts are coming. The Fed has signaled their intention to cut rates more aggressively than they have in the past. We also believe the economy isn’t as strong as some might think, so we expect rates to come down. I think we’ve already hit the peak for rates. Right now, it’s really about earnings.”
However, if the labor market weakens further, the pace of these cuts could accelerate. Regarding the potential impact of a Donald Trump presidency and a possible Republican sweep, Feroli highlighted the uncertainties. A Republican sweep could lead to more tax cuts, possibly extending or expanding those from 2017, which might boost growth but also increase deficits.
Additionally, trade and immigration policies remain unpredictable. While deregulation might mitigate some negative effects, the overall policy environment is still uncertain. Finally, when asked about the implications of a Republican sweep for bond markets, Feroli expressed concern about the deficit trajectory. Extending all tax cuts, particularly in a more Republican-leaning scenario, could exacerbate the deficit problem.
In another episode of Fast Money, Chris Mman, Chief Investment Officer at Lafayette College, discussed the potential timing for Federal Reserve rate cuts, emphasizing that September appears to be a strong possibility. He notes, however, that the Fed will be influenced by upcoming economic reports. Mman also highlights concerns over equity valuations and the potential impact of delayed rate cuts on the labor market.
“I believe July should have been on the table based on today’s report. However, the Fed usually prefers to signal their plans in advance. My expectation was that they probably wouldn’t preemptively set up for September, but given today’s report, it seems quite likely they will. The Fed might use upcoming meetings and communications to guide the market’s expectations.”
As political uncertainties, including the Democratic ticket’s spotlight, add to the mix, Mman reassures that the Fed is likely to focus on economic data rather than political pressures. He stresses that while inflation remains a critical issue, the Fed’s priority will be managing employment trends to avoid a deeper economic downturn.
“Even if inflation accelerates temporarily, it’s unlikely to concern the Fed greatly. Currently, the focus has shifted more to employment reports rather than inflation. If employment were to unexpectedly strengthen, it could reduce the Fed’s incentive to cut rates. Ultimately, the goal is to avoid a severe economic slowdown that would force them into aggressive rate cuts.”
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Our Methodology
In this article, we review recent episodes of CNBC’s Fast Money, where Fast Money traders highlighted stocks with high growth potential. We tracked each stock mentioned and ranked them based on frequency. From this, we identified the top 7 stocks that were mentioned a lot by Fast Money traders and were widely held by hedge funds. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
At Insider Monkey we are obsessed with 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 Fast Money Stocks To Buy According To Hedge Funds
7. Warner Bros. Discovery Inc. (NASDAQ:WBD)
Number of Hedge Fund Investors: 48
Warner Bros. Discovery Inc. (NASDAQ:WBD) offers a promising investment opportunity due to its strong content creation, international growth prospects, and cost efficiencies. With a vast library from HBO, Warner Bros. Discovery Inc. (NASDAQ:WBD) is set to capture a significant share of the expanding streaming market. Its rich content library and commitment to producing new, original programming give it a competitive advantage.
The merger between WarnerMedia and Discovery Inc. is expected to generate significant cost savings by streamlining operations and reducing redundancies, which should enhance its financial performance. Moreover, Warner Bros. Discovery Inc. (NASDAQ:WBD)’s strategy to expand internationally opens up new markets where streaming is growing rapidly, diversifying its revenue and boosting global reach.
Moreover, the combination of Discovery’s extensive content with Warner Bros.’s high-profile offerings is likely to attract more subscribers to its streaming services, such as HBO Max and Discovery+. With a solid financial foundation and strategic investments in technology, Warner Bros. Discovery Inc. (NASDAQ:WBD) is well-positioned for substantial growth, making it an attractive option for bullish investors.
Bonhoeffer Capital Management stated the following regarding Warner Bros. Discovery, Inc. (NASDAQ:WBD) in its first quarter 2024 investor letter:
“In remembrance of Charlie Munger, I listened to and read his investment speeches in Poor Charlie’s Almanac. His speech to the University of Southern California business school specifically dealt with the application of worldly wisdom to investment management and business. There were five ideas presented by Munger in that speech which are particularly relevant in the Bonhoeffer portfolio. First, over the long term, it’s hard for a stock to earn more than the underlying business earns. As an illustration of this principle, we examined two firms, Old Dominion Freight Line (ODFL) and Warner Bros. Discovery, Inc. (NASDAQ:WBD).
WBD is an example of a value stock whose value has been impaired by a declining intrinsic value over time. Historically, WBD has been consolidating media content and distribution firms. However, the media content and distribution industry has been fragmenting over the past 20 years, with many new competitors and lower barriers to entry. Based upon Morningstar’s estimates, WBD is almost always undervalued, but stock price declined by 13.4% per year less than intrinsic value which declined by 5% per year, which is still a disaster compared to the index which increased by 12.7% per year. The average RoE was 7.2% and was declining through the period and ended negative. The chart below shows both the stock and Morningstar’s estimate of its intrinsic value over time.”
6. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Investors: 95
Walmart Inc. (NYSE:WMT) is a compelling investment opportunity thanks to its extensive retail network and effective omnichannel strategy, which boosts its market reach and customer engagement. By integrating a broad array of physical stores with a strong e-commerce presence, Walmart Inc. (NYSE:WMT) meets diverse shopping preferences and captures a wide consumer base.
Walmart Inc. (NYSE:WMT)’s continuous upgrades in digital infrastructure, including improved delivery options and smooth integration of online and offline services, are key to its growth. Walmart Inc. (NYSE:WMT)’s leadership in the grocery sector further drives its growth. As a major U.S. grocer, Walmart Inc. (NYSE:WMT) benefits from high-margin sales and draws in customers with its low prices and wide product range. Its emphasis on expanding grocery delivery and pickup services caters to growing consumer demand for convenience, enhancing its market position.
By adopting advanced technologies like AI and automation, Walmart Inc. (NYSE:WMT) is streamlining its operations, optimizing its supply chain, and enhancing customer experiences, which is expected to drive long-term profitability and reinforce its market dominance.
5. Netflix Inc. (NASDAQ:NFLX)
Number of Hedge Fund Investors: 103
Netflix Inc. (NASDAQ ) is a leading global streaming entertainment service, known for its extensive library of movies, TV shows, and original content. Netflix Inc. (NASDAQ:NFLX)’s global subscriber growth is fueled by a mix of popular original content and strategic pricing, keeping it at the forefront of the market. Netflix Inc. (NASDAQ:NFLX)’s expansion into gaming and live sports streaming not only diversifies its revenue but also enhances customer engagement, making its platform more attractive. Additionally, Netflix Inc. (NASDAQ:NFLX)’s investments in international markets are expected to drive further expansion as more regions embrace streaming services.
Netflix Inc. (NASDAQ:NFLX)s edge lies in its extensive content library, well-known brand, and data-driven content strategies, which help attract new subscribers and keep existing ones loyal. With its ability to adapt to changing consumer preferences, Netflix Inc. (NASDAQ:NFLX) is well-positioned for continued growth, supporting a positive outlook for its stock.
Polen Focus Growth Strategy stated the following regarding Netflix, Inc. (NASDAQ:NFLX) in its Q2 2024 investor letter:
“Finally, we trimmed Netflix, Inc. (NASDAQ:NFLX) mostly due to valuation but also as a source of funds to add to the new position in Shopify. As a reminder, we added to our position in August 2022 amid broad concerns about the company’s ability to grow and monetize shared passwords. We expected Netflix to show progress in monetizing shared passwords, leading to robust free cash flow generation. This is now playing out and is appreciated by the market. Hence, given the balance of growth and valuation, we felt it was appropriate to reduce our exposure to a more normal weight.”
4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Investors: 165
Alphabet Inc. (NASDAQ:GOOGL)’s strong position in global search through Google provides a stable base for its advertising revenue, which continues to grow as more businesses shift to digital platforms. This foundation is strengthened by the success of YouTube and Google Ads, which consistently attract significant advertiser spending, solidifying Alphabet Inc. (NASDAQ:GOOGL)’s market leadership. In addition to advertising, Alphabet Inc. (NASDAQ:GOOGL)’s Google Cloud division plays a crucial role in the company’s growth, benefiting from the rapidly expanding cloud market. Google Cloud’s innovative services and increasing market share are diversifying Alphabet Inc. (NASDAQ:GOOGL)’s revenue streams.
Furthermore, Alphabet Inc. (NASDAQ:GOOGL)’s investments in AI, including advancements in machine learning and autonomous driving through Waymo, place the company at the forefront of technological innovation with the potential for substantial long-term value. Financially, Alphabet Inc. (NASDAQ:GOOGL) demonstrates consistent revenue growth and maintains healthy operating margins, thanks to its strong advertising business. Alphabet Inc. (NASDAQ:GOOGL) exceeded earnings expectations, reporting an EPS of $1.89 compared to the anticipated $1.85. Alphabet Inc. (NASDAQ:GOOGL)’s substantial cash reserves give it the flexibility to invest in new growth areas and return value to shareholders through share buybacks.
Mar Vista Focus strategy stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q2 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) reported robust quarterly financials, demonstrating accelerated revenue growth and improved margins from restructuring efforts. The company’s core advertising business is rebounding after a challenging 2022-2023 period, when advertisers curtailed spending due to economic concerns. While this quarter’s exceptional growth rate may not persist, Alphabet’s performance indicates it is likely to exceed our annual projections.
Following Meta’s lead, Alphabet is adopting a more stringent approach to expenses. The company continues to reduce headcount and consolidate teams, aiming to counterbalance the impact of infrastructure investments on profitability. Alphabet’s better-than-expected revenue and earnings underscore both the resilience of its core business and management’s early success in sustainably restructuring the cost base.
Notably, AI advancements are already showing promising results, enhancing consumer engagement, and improving advertiser performance. These developments position Alphabet favorably in an increasingly AI-driven digital landscape.”
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Investors: 179
NVIDIA Corporation (NASDAQ:NVDA)’s GPUs are essential for gaming, data centers, and AI, making the company well-positioned to benefit from the rising demand for high-performance computing. NVIDIA Corporation (NASDAQ:NVDA)’s strong presence in AI is a major growth factor, as its GPUs play a crucial role in training AI models. With AI rapidly expanding across various industries, NVIDIA Corporation (NASDAQ:NVDA) stands to gain from the increased need for its products.
Additionally, NVIDIA Corporation (NASDAQ:NVDA)’s AI platforms, like NVIDIA AI Enterprise and Omniverse, further establish its leadership in this field. NVIDIA Corporation (NASDAQ:NVDA)’s move into the automotive sector with its NVIDIA DRIVE platform for autonomous vehicles offers another promising growth opportunity. By collaborating with top automotive manufacturers and investing in autonomous driving technology, NVIDIA Corporation (NASDAQ:NVDA) is set to thrive in this emerging market.
Financially, NVIDIA Corporation (NASDAQ:NVDA) has demonstrated impressive revenue and profit growth, driven by its strengths in GPUs and AI, and its expansion into automotive and data centers. FQ2 2025 Revenue reached $30 billion, marking a 15% increase from the previous quarter and a 122% increase from the previous year, surpassing the expected $28 billion. Data center revenue hit a record $26.3 billion, up 16% from the previous quarter and 154% from the previous year, driven by high demand for NVIDIA Hopper, GPU computing, and networking platforms.
Here’s what the CFO of NVIDIA Corporation (NASDAQ:NVDA), Colette Kress, has to say in their latest FQ2 2025 earnings call:
“Q2 was another record quarter. Revenue of $30 billion was up 15% sequentially and up 122% year-on-year and well above our outlook of $28 billion. Starting with data center, data center revenue of $26.3 billion was a record, up 16% sequentially and up 154% year-on-year, driven by strong demand for NVIDIA Hopper, GPU computing, and our networking platforms. Compute revenue grew more than 2.5 times, networking revenue grew more than 2 times from the last year. Cloud service providers represented roughly 45% for our data center revenue and more than 50% stemmed from the consumer, Internet, and enterprise companies. Customers continue to accelerate their Hopper architecture purchases, while gearing up to adopt Blackwell.
Key workloads driving our data center growth include generative AI, model training, and inferencing. Video, image, and text data pre and post-processing with CUDA and AI workloads, synthetic data generation, AI-powered recommender systems, SQL, and vector database processing as well. Next-generation models will require 10 to 20 times more compute to train with significantly more data. The trend is expected to continue. Over the trailing four quarters, we estimate that inference drove more than 40% of our data center revenue. CSPs, consumer Internet companies, and enterprises benefit from the incredible throughput and efficiency of NVIDIA’s inference platform. Demand for NVIDIA is coming from frontier model makers, consumer Internet services, and tens of thousands of companies and startups building generative AI applications for consumers, advertising, education, enterprise and healthcare, and robotics.
Developers desire NVIDIA’s rich ecosystem and availability in every cloud. CSPs appreciate the broad adoption of NVIDIA and are growing their NVIDIA capacity given the high demand. NVIDIA H200 platform began ramping in Q2, shipping to large CSPs, consumer Internet, and enterprise company. The NVIDIA H200 builds upon the strength of our Hopper architecture and offering, over 40% more memory bandwidth compared to the H100. Our data center revenue in China grew sequentially in Q2 and is a significant contributor to our data center revenue. As a percentage of total data center revenue, it remains below levels seen prior to the imposition of export controls. We continue to expect the China market to be very competitive going-forward. The latest round of MLPerf inference benchmarks highlighted NVIDIA’s inference leadership with both NVIDIA, Hopper, and Blackwell platforms combining to win gold medals on all tasks.”
2. Meta Platforms Inc. (NASDAQ:META)
Number of Hedge Fund Investors: 219
Meta Platforms Inc. (NASDAQ:META) dominates the social media space with platforms like Facebook, Instagram, and WhatsApp, each attracting billions of users. This large user base creates substantial revenue opportunities through targeted advertising, a key driver of Meta Platforms Inc. (NASDAQ:META)’s financial success. Meta Platforms Inc. (NASDAQ:META)’s investment in the metaverse is a bold move aimed at unlocking new revenue streams.
Through its Reality Labs division, Meta Platforms Inc. (NASDAQ:META) is at the forefront of developing augmented and virtual reality technologies, which have the potential to transform online interactions. Although still in the early stages, these initiatives promise significant long-term growth as the metaverse concept gains traction.
Meta Platforms Inc. (NASDAQ:META)’s strong financial performance this quarter highlights its leadership in the tech industry, driven by the innovative release of Llama 3.1, an open-source AI model. Llama 3.1, known for its better cost performance compared to leading closed models, could be a turning point for open-source AI, much like Linux was in its field. This innovation underscores Meta Platforms Inc. (NASDAQ:META)’s commitment to open-source development, which the company views as beneficial for developers, its apps, and the global community.
Financially, Meta Platforms Inc. (NASDAQ:META) posted $39.1 billion in revenue, reflecting a 22% year-over-year increase, alongside a 38% operating margin and $13.5 billion in net income. Meta Platforms Inc. (NASDAQ:META) also generated $10.9 billion in free cash flow and returned value to shareholders through stock repurchases and dividends. Meta Platforms Inc. (NASDAQ:META)’s focus on AI innovation, strong financials, and a growing user base of 3.27 billion daily active users across its Family of Apps positions it well for continued growth and long-term success.
Analysts remain optimistic about Meta Platforms Inc. (NASDAQ:META) due to its strategic positioning and growth potential. Meta Platforms Inc. (NASDAQ:META)’s dedication to evolving its platforms and exploring new technological frontiers indicates a promising future, making Meta an appealing choice for long-term investors.
Mar Vista Focus strategy stated the following regarding 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.
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. Amazon.com Inc. (NASDAQ:AMZN)
Number of Hedge Fund Investors: 308
As the world’s largest online retailer, Amazon.com Inc. (NASDAQ:AMZN) continues to benefit from the growing e-commerce sector, which is expected to expand significantly in the coming years. Amazon.com Inc. (NASDAQ:AMZN)’s Prime membership program, with over 200 million global subscribers, strengthens customer loyalty and provides a reliable and growing revenue stream. Amazon Web Services (AWS), Amazon.com Inc. (NASDAQ:AMZN)’s cloud computing arm, is a key driver of the company’s overall growth.
As the leader in cloud infrastructure, AWS offers critical services across various industries, with its high-profit margins significantly boosting Amazon.com Inc. (NASDAQ:AMZN)’s overall profitability, effectively balancing the lower margins from its retail operations. As more businesses transition to cloud-based solutions, AWS is well-positioned to capture a large share of this expanding market, ensuring continued revenue and profit growth for Amazon.com Inc. (NASDAQ:AMZN). In addition to its strengths in e-commerce and cloud computing, Amazon.com Inc. (NASDAQ:AMZN) is also expanding into other high-growth areas such as advertising, streaming, and artificial intelligence.
Amazon.com Inc. (NASDAQ:AMZN)’s advertising business has rapidly grown into a multi-billion-dollar segment by leveraging extensive consumer data to deliver targeted advertising solutions. Moreover, Amazon.com Inc. (NASDAQ:AMZN)’s investments in AI and machine learning enhance its innovation capabilities across different business areas, including logistics and customer service.
While we acknowledge the potential of Amazon.com Inc. (NASDAQ:AMZN), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the ones 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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