In this article, we discuss the 8 most profitable blue-chip stocks to invest in along with the updates around the latest inflation report.
The September inflation report came in hotter than expected and showed that it remains sticky. Headline inflation rose by 2.4%, slightly above the anticipated 2.3%, and down from 2.5% in August. Month-over-month, CPI increased by 0.2%, exceeding the forecast of 0.1%.
Core inflation, excluding food and energy, also came in higher than expected at 3.3%, compared to the anticipated 3.2%, marking a slight increase from August. On a monthly basis, core CPI rose by 0.3%, which matched August’s figures but was above expectations of 0.2%.
Following the report, the market is expecting a 25 basis points rate cut to no rate cuts in the upcoming Fed meeting. According to the CME FedWatch tool, 79.9% of interest rate traders expect the rate cuts to be at 450-475 bps at the coming Fed meeting while 20.1% expect the rate cut to stay the same. At the beginning of the month, 32.1% expected a 50 bps rate cut, while 67.9% anticipated a 25 bps cut.
Understanding Inflation Trends and Federal Reserve Strategy
Despite the sticky inflation, IBM’s vice chair, Gary Cohn believes that the Fed will cut rates by 100 bps this year. In an interview at CNBC’s ‘Money Movers’, he suggested that the U.S. is experiencing what a soft landing looks like, with inflation decreasing but not steadily. He indicated that reaching the Fed’s 2% target will be challenging, as inflation rates are likely to fluctuate around this level.
Cohn noted that for the first time in nearly two decades, the Fed is balancing both sides of its dual mandate, employment, and price stability, after focusing primarily on one at a time. He believes the Fed is making the right decisions and is currently in a delicate position as it missed meeting opportunities this year.
Cohn expects that the Fed will implement a total of 100 basis points in rate cuts this year, likely consisting of 25 basis point reductions over the next couple of months. When asked about inflation targets, he expressed a preference for slightly exceeding the target inflation rate, suggesting that a rate of around 2.2% would be more acceptable in a growing economy than undershooting the target.
Cohn also highlighted concerns about geopolitical risks and said that global tensions could lead to inflationary pressures by disrupting supply chains and increasing shipping costs.
With that, let’s look at the 8 Most Profitable Blue Chip Stocks to Invest in.
8 Most Profitable Blue Chip Stocks to Invest in
Our Methodology
For this article, we use stock screeners to identify nearly 30 stocks above $100 billion market cap and $10 billion TTM net income. Next, we narrowed our list to 8 stocks that had a 5-year net income compound annual growth rate of above 10% and were most widely held by institutional investors. The most profitable blue chip stocks are listed in ascending order of the hedge fund sentiment, which was taken from Insider Monkey’s Q2 database of 912 hedge funds.
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).
8 Most Profitable Blue Chip Stocks to Invest in
8. Mastercard Incorporated (NYSE:MA)
Market Cap: $461.871B
5-Year Net Income CAGR: 12.81%
TTM Net Income: $12.258 billion
Number of Hedge Fund Holders: 142
One of the most profitable blue-chip stocks, Mastercard Incorporated (NYSE:MA) operates as a technology company in the global payments sector and facilitates connections among consumers, financial institutions, merchants, governments, and businesses to enable secure and efficient electronic payments. It uses its well-known brands like Mastercard, Maestro, and Cirrus to provide a range of payment solutions through a flexible multi-rail payments network.
To grow its core payments, the company aims to increase consumer payment adoption, capture new transaction flows like B2B payments and remittances, and innovate payment methods such as contactless transactions and digital currencies.
The company improves its services by providing insights, consulting, and loyalty solutions, while also expanding its reach to new customer segments and geographic markets. As of Q2, the company’s network includes 3.4 billion debit, prepaid, and credit cards issued globally.
On October 10, Mastercard (NYSE:MA) and Citi announced a partnership to facilitate cross-border payments to Mastercard debit cards in 14 markets, with plans for further expansion. Using Citi’s WorldLink Payment Services and Mastercard Move, the service allows near-instant, full-value payments almost 24/7. The solution is accessible to Citi clients across 65 countries and supports several applications, including insurance payouts and gig-economy payments.
On September 30, The Fly reported that Oppenheimer initiated coverage of the company with an Outperform rating and a price target of $591. The firm expects that Mastercard will benefit from a prolonged transition from paper-based payments to card payments, projecting high-single to low-double-digit growth in payment volume over the next three years. The analyst expects Mastercard to outpace Visa in revenue growth by 2% over the next two years.
7. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Market Cap: $970.523 Billion
5-Year Net Income CAGR: 22.90%
TTM Net Income: $29.908 billion
Number of Hedge Fund Holders: 156
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the pioneer of the pure-play foundry model and has maintained its position as the top semiconductor foundry for decades. By 2023, it served 528 customers and produced nearly 12,000 products for multiple sectors such as high-performance computing, smartphones, IoT, automotive, and consumer electronics.
The company collaborates with global customers and partners, using advanced technologies and design solutions to promote innovation in the semiconductor industry. It has operations in Asia, Europe, and North America. Its manufacturing facilities, including several wafer fabs in Taiwan, the U.S., and China, produced over 16 million 12-inch equivalent wafers last year.
The company is further expanding its business at a fast pace, especially after the rise of AI. On August 20, ESMC, a joint venture between Taiwan Semiconductor (NYSE:TSM), Bosch, Infineon, and NXP, celebrated the groundbreaking of its first semiconductor fab in Dresden, Germany. European Commission President Ursula von der Leyen announced a €5 billion aid package to support the project.
The facility will produce advanced semiconductors for Europe’s automotive and industrial sectors and aims for a monthly capacity of 40,000 wafers. The total investment is projected to exceed €10 billion and generate around 2,000 direct high-tech jobs and further indirect employment opportunities.
Taiwan Semiconductor (NYSE:TSM) reported its net revenue for September 2024 on October 9, which reached approximately NT$251.87 billion (NT$1 = US$0.031) on a consolidated basis. This represents a 0.4% increase compared to August 2024 and a 39.6% rise from September 2023. For the period from January to September 2024, total revenue amounted to over NT$2 trillion, representing a nearly 32% growth compared to the same timeframe in 2023. The company will announce its full earnings on October 17.
The company ranks at 7 on our list of most profitable blue chip stocks.
Diamond Hill Capital stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2024 investor letter:
“On an individual holdings’ basis, top contributors to return in Q2 included our long positions in Alphabet, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and Microsoft. Semiconductor manufacturer Taiwan Semiconductor’s (TSMC) fundamentals remain solid as demand for its chips continues growing — particularly as the machine learning and cloud computing trends gain more traction.”
6. NVIDIA Corporation (NASDAQ:NVDA)
Market Cap: $3.254 Trillion
5-Year Net Income CAGR: 80.81%
TTM Net Income: $53.009 billion
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) focuses on graphics, computing, and networking solutions. It gained prominence with its breakthrough graphics processing units (GPUs), known for their ability to handle multiple tasks at once. While initially a significant player in the gaming industry, the company has since expanded into professional visualization, data centers, and automotive sectors. It is one of the most profitable blue chip stock.
It is one of the best stocks to buy and hold for the next decade. Its AI networking platform, Spectrum X, is projected to generate billions in revenue within a year. The company recently secured a deal with Salesforce, improving AI and data services for businesses. Additionally, the company launched Aerial, an AI tool designed to optimize wireless networks for next-gen technologies like 5G and autonomous systems.
NVIDIA (NASDAQ:NVDA) will announce its earnings in November and expects $32.5 billion in revenue for the fiscal third quarter of 2025, driven by its Hopper architecture and Blackwell chips. The company’s CEO Jensen Huang told CNBC that demand for the company’s upcoming AI chip is “insane” with companies like OpenAI, Microsoft, and Meta eager to obtain it.
On October 10, The Fly reported that after a three-day roadshow with the CEO and CFO of the company, Morgan Stanley revealed that Nvidia’s (NASDAQ:NVDA) Blackwell NVL36/72 systems are in high demand and are sold out for the next year. The firm highlighted the long-term potential of accelerated computing and noted that the AI investment cycle is still in its early stages.
Morgan Stanley maintained its Overweight rating on the company and set a $150 price target as the firm referenced strong market conditions and continued momentum for the company.
Ithaka Group’s Ithaka US Growth Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“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.”
5. Apple Inc. (NASDAQ:AAPL)
Market Cap: $3.49 Trillion
5-Year Net Income CAGR: 12.85%
TTM Net Income: $101.956 billion
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) designs, manufactures, and markets a range of technology products, including smartphones, personal computers, tablets, wearables, and accessories, while also offering related services. The product lines include the iPhone, a series of smartphones running on the iOS operating system. It is the 5th most profitable stock on our list.
The Mac line consists of personal computers based on macOS, including laptops such as the MacBook Air and MacBook Pro, as well as desktops like the iMac and Mac Pro. The iPad, a multipurpose tablet operating on iPadOS, includes models like the iPad Pro and iPad mini.
Apple (NASDAQ:AAPL) operates primarily on a geographic basis, with reportable segments that include the Americas, Europe, Greater China, Japan, and the Rest of Asia Pacific. Each segment is managed separately to cater to local customer needs and market conditions.
On October 6, Bloomberg reported that the company is moving away from its traditional annual product upgrade cycle to allow for more frequent releases and fewer delays. Previously, the company updated major products like iPhones and Macs on a set schedule, unveiling software in June and launching devices in September and October.
However, the growing range of products has made this approach impractical. As a result, Apple (NASDAQ:AAPL) is adopting a staggered release strategy, as can be seen by its upcoming AI tool, Apple Intelligence, set to launch on October 28 with iOS 18.1. The shift aims to improve innovation and enable revenue generation outside the holiday quarter.
4. Alphabet Inc. (NASDAQ:GOOGL)
Market Cap: $2 Trillion
5-Year Net Income CAGR: 20.33%
TTM Net Income: $87.657 billion
Number of Hedge Fund Holders: 216
One of the most profitable blue chip stocks, Alphabet Inc. (NASDAQ:GOOGL) is another contender for the most profitable blue chip stocks and is another company on our list that is a part of the tech Big Five. The company’s infrastructure includes a diverse range of subsidiaries, with Google remaining its largest and most well-known entity, which oversees services like Android, YouTube, and Google Search.
Other subsidiaries focus on multiple sectors, including health, venture capital, and autonomous driving. The company’s mission is to organize global information and make it accessible, with Google Search, YouTube, Google Assistant, and Google Cloud as key tools for users and businesses.
AI is also a big part of the company and has been integrated into its products for over a decade and powers features like Google Translate and Google Photos. Its latest AI model, Gemini, introduced in 2023, further advances its capabilities across several data types.
Alphabet (NASDAQ:GOOGL) is experiencing a pebble in its shoe as it is facing intensified antitrust scrutiny in the U.S. The Justice Department is considering forcing it to spin off certain services to address monopolistic practices in online searches.
However, Mizuho Securities analyst James Lee has still reaffirmed a Buy rating on the company’s stock due to its strong fundamentals and a positive outlook despite regulatory hurdles.
TipRanks reported that Lee’s analysis considers the Department of Justice’s proposed changes to Google’s search operations, which include banning certain exclusive agreements and mandating the sharing of search and AI-related data. He believes these adjustments may have some structural implications but will not significantly weaken Google’s market position.
He believes that Alphabet (NASDAQ:GOOGL) can effectively manage these regulatory challenges. Additionally, the proposed remedies regarding search result displays and advertising are expected to have minimal effects on the company’s overall operations.
Patient Capital Management 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)
Market Cap: $1.494 Trillion
5-Year Net Income CAGR: 24.69%
TTM Net Income: $51.435 billion
Number of Hedge Fund Holders: 219
Third on our list of most profitable blue chip stocks is Meta Platforms, Inc. (NASDAQ:META), which is one of the American Big Tech that has evolved significantly since its inception. It has expanded its portfolio to include widely used platforms such as Facebook, Instagram, Threads, and WhatsApp.
While the company is making significant investments in several technology-related platforms and products, most of its revenue is generated through advertisement. Through strategic acquisitions and an expanding suite of products, it remains a key player in shaping the future of technology and communication.
On September 25, Meta (NASDAQ:META) introduced Orion, its first true augmented reality (AR) glasses, previously known as Project Nazare. These glasses aim to blend the appearance of traditional eyewear with advanced AR capabilities, marking a significant advancement in wearable technology.
The company is currently providing access to Orion for its employees and select external testers to refine the product before launching a consumer version. While it is still in the prototype phase and not yet available for consumers, it shows the commitment to creating a polished product. It plans to improve display quality, reduce the size further, and make the glasses more affordable as they move toward a consumer release.
Meta (NASDAQ:META) is expected to release its earnings on October 30 and some analysts are already showing optimism in its results. On October 9, The Fly reported that Cantor Fitzgerald analyst Deepak Mathivanan raised the price target for the stock from $660 to $670 while maintaining an Overweight rating on the stock.
The firm expects its Q3 results and Q4 outlook to surpass consensus estimates and noted strong ad performance in recent months and positive trends for future growth for the company. Cantor believes Meta (NASDAQ:META) will benefit from rising contributions from sectors like travel. Mathivanan mentioned that investor expectations are high due to recent strong performance, and they expect revenue guidance of $48 billion for Q4 to drive further share growth.
Rowan Street Capital stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q2 2024 investor letter:
“We are pleased to report that Meta Platforms, Inc. (NASDAQ:META), our largest position in the fund, has delivered a remarkable performance, +450% since our November 2022 note. Our investment in Meta dates back to 2018, with an average cost basis of approximately $172 per share. Today, the stock trades around $535, reflecting a 3x return over the six-year holding period, equating to a 20% annualized return.
We would like to remind you that achieving these types of returns is never a straight path. From time to time, we might experience volatility — that’s simply part of the investment journey. In fact, wealth creation and volatility go hand in hand. There’s no escaping it; it’s the “price of admission” the market demands. If you take a look at the chart below, you’ll notice the drawdowns META stock has faced over the years, with 2022 standing out as a particularly challenging period, where the stock saw a 75% drop…” (Click here to read the full text)
2. Microsoft Corporation (NASDAQ:MSFT)
Market Cap: $3.103 Trillion
5-Year Net Income CAGR: 17.57%
TTM Net Income: $88.136 billion
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is one of the pioneers of personal computing and is one of the biggest technology companies in the world. It aims to make digital technology and AI accessible to everyone worldwide.
It offers a wide range of products and services, including cloud solutions, software applications, and hardware devices. Its research and development focus on improving productivity and business processes, building smart cloud and edge platforms, and creating more personalized computing experiences.
Moreover, Microsoft (NASDAQ:MSFT) also maintains data centers to expand capacity for growing AI service demands. Most products are manufactured by third-party contractors, which offers flexibility, though some components rely on a limited number of suppliers, which could disrupt production. Its internal research and development spans several groups, including Cloud and AI, Security, and Gaming, allowing the company to maintain competitive advantages.
Over the last few quarters, the company has taken over a huge part of the AI market and its products are being widely used by other companies. Its tools like Copilots and the Azure OpenAI Service have gained widespread adoption, with 60% of Fortune 500 companies implementing Copilots and 65% using Azure OpenAI Service.
Microsoft (NASDAQ:MSFT) is also one of the best AI datacenter stocks. In 2023, the company increased its AI data center spending by 50%, surpassing Amazon’s 3% decrease. The company partnered with BlackRock to create a $100 billion fund for AI data center growth and pledged over $4 billion for AI infrastructure in Italy. Reports show that Microsoft is set to double its data center capacity to 5 gigawatts this year. It is one of the most profitable blue chip stocks to invest in.
Generation Investment Management 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)
Market Cap: $1.937 Trillion
5-Year Net Income CAGR: 29.71%
TTM Net Income: $44.42 billion
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) is one of the biggest technology and e-commerce companies in the world. Its operations span e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence industries. The company tops our list of most profitable blue chip stocks.
Its operations are divided into three segments: North America, International, and Amazon Web Services (AWS). For consumers, the company offers a wide selection of products through online and physical stores and emphasizes low prices, fast delivery, and customer service.
One of Amazon’s (NASDAQ:AMZN) significant projects is Kuiper Systems LLC, also known as Project Kuiper. It is a subsidiary of the company founded in 2019 and provides global broadband internet through a satellite constellation in low Earth orbit. The company has invested a substantial amount of money in the project to make it an important player in satellite-based internet services.
On October 10, Morgan Stanley analyst Brian Nowak reiterated a Buy rating for the company stock due to the firm’s confidence in Project Kuiper. Although Kuiper’s costs, including launch expenses, hardware, and R&D, are complex, the analyst views the financial impact as manageable.
He acknowledged the project’s delays but believes Amazon (NASDAQ:AMZN) can absorb the estimated $1.5 billion EBIT hit in 2025, which is minimal compared to its projected $75-$80 billion EBIT. Nowak remains optimistic about the company’s financial strength and ability to handle the timing of cost recognition.
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 potential of Amazon.com, Inc. (NASDAQ:AMZN) as an investment, our conviction lies in the belief that 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 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’.
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