In this article, we will be taking a look at the 9 best tech stocks to buy according to hedge funds. To skip our analysis of the tech industry, you can go directly to see the 4 Best Tech Stocks to Buy According to Hedge Funds.
Invesco QQQ Trust is an exchange traded fund trading under the ticker ‘QQQ’ on the NASDAQ stock exchange. The ETF tracks the NASDAQ-100 Index. The index includes the 100 largest non-financial companies listed on the NASDAQ based on their market capitalization. The index, as well as the ETF, are rebalanced quarterly based on the respective changes while the reconstitution is carried out on an annual basis.
Invesco QQQ Trust is heavily weighted towards companies in the technology sector as nearly half of its portfolio weight is concentrated across the information technology sector companies. The tech stocks picked for this list accounted for more than half of the ETF’s portfolio weight as of Q2 2022. The fund has been in regulation since late 1999 and has generated returns of 8.26%, closely following the underlying index and significantly exceeding the Nasdaq Composite Index and the Russel 3000 Index.
First half of 2022 witnessed a significant decline in the market capitalization of companies in almost every sector due to the macroeconomic environment and increasing inflationary pressures. Speaking about the positives for Q3 2022, Ryan T. McCormack and Paul J. Schroeder wrote in the recent Invesco QQQ quarterly report:
“One positive development is that valuations, arguably some of the biggest areas of pushback over the last two years, have declined considerably. Valuation of the Nasdaq 100 index (the index QQQ tracks finished the quarter with a trailing 12-month price-to-earnings ratio (P/E) of 24.16). Looking through a longer-term lens, this P/E level has not been seen since the early days of the pandemic (Q2 2020) and may represent an opportunity for investors to gain exposure to large-cap growth at the most attractive valuations in the past two years.”
Pixabay/Public Domain
Methodology
For this article, we picked the top nine holdings of Invesco QQQ Trust and sorted them based on the number of hedge funds holding long positions in these stocks according to Insider Monkey data gathered for 895 hedge funds, as of the end of June.
9. Tesla, Inc. (NASDAQ:TSLA)
Percentage of Invesco QQQ Trust’s Portfolio: 3.90%
Number of Hedge Fund Holders: 72
Based in Austin, Texas, Tesla, Inc. (NASDAQ:TSLA), one of the best tech stocks to buy according to hedge funds, designs, develops, manufactures, sells and leases fully electric vehicles and energy generation and storage solutions. Its current portfolio of products includes Model 3 and Model S sedans, Model Y and Model X SUVs, while upcoming products include Cybertruck, Tesla Roadster and Tesla Semi – a light commercial vehicle. In addition, the company sells battery energy storage products as well as solar energy systems. Tesla, Inc. (NASDAQ:TSLA) produced 930,422 vehicles in 2021.
In July, Tesla, Inc. (NASDAQ:TSLA) released its financial results for the second quarter of 2022. Its total sales increased by 42% y-o-y to $16.9 billion, while its net earnings increased by 93% y-o-y to $2.3 billion, for the three months ended June 30, 2022. The company’s EPS in the period was recorded at $2.27, beating the consensus by $0.46.
As of Q2 2022, Tesla Inc (NASDAQ: TSLA) accounted for a 3.90% weightage in Invesco QQQ Trust’s portfolio. On the other hand, according to the data on 895 hedge funds tracked by Insider Monkey, 72 hedge funds held shares of Tesla Inc (NASDAQ:TSLA), worth $7.2 billion.
Here is what GMO LLC has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:
“To put the demand growth for clean energy materials into perspective, let’s look at Tesla (NASDAQ:TSLA). At its Battery Day last year, Tesla projected three terawatt hours of lithium-ion battery capacity needed in 2030 for the EVs and storage they expect to produce. To reach this target, Tesla alone would gobble up approximately 75% of the world’s current nickel production and four times the world’s current lithium production. These numbers are astounding enough, but when one considers that EVs currently represent just 15% of global nickel demand and about 45% of lithium demand and that Tesla will likely be producing only a small proportion of the world’s EVs in 2030, the implications are staggering. Clean energy materials companies will make a lot more money in the decades to come than they ever have both because they will be selling a lot more metric tons of material and because there are certain to be shortages where supply can’t keep up with the rapidly growing demand.”
8. NVIDIA Corporation (NASDAQ:NVDA)
Percentage of Invesco QQQ Trust’s Portfolio: 3.78%
Number of Hedge Fund Holders: 84
Founded in 1993, California-based NVIDIA Corporation (NASDAQ:NVDA) is a leading technology company focused on the design and manufacturing of accelerated computing hardware and software products. Its core businesses comprise of Gaming, Data Center, Professional Visualization, and Automotive, with Gaming and Data Center making up for more than 80% of its revenues. Its GeForce GPU is used by more than 200 million gamers and creators, making it the market leader with 80% market share in PC Gaming.
NVIDIA Corporation (NASDAQ:NVDA) released the financial results for the quarter ended July 31, 2022, in last week of August. Its revenues increased by 3% y-o-y to $6.7 billion, while its net income declined by 72% y-o-y to $656 million. The EPS for the quarter was recorded at $0.26, beating the consensus by $0.06. NVIDIA Corporation (NASDAQ:NVDA) is also going to pay a quarterly cash dividend of $0.04 per share by the end of September.
Earlier in September, Needham analyst Rajvindra Gill lowered the firm’s price target on Nvidia Corporation (NASDAQ:NVDA) shares to $170 from $185 while maintaining a ‘Buy’ rating on the shares. Despite the lowering of price target, the analyst is positive about NVIDIA’s shares for “their attractive valuation, superior balance sheet, and robust data center buildouts”.
NVIDIA Corporation (NASDAQ:NVDA) accounted for a significant portion of Invesco QQQ Trust’s Portfolio as of Q2 2022, making up for 3.78% of the ETF’s portfolio. The GPU company is subject to bullish sentiment from a large number of hedge funds as 84 of the 895 hedge funds held its shares as of Q2 2022, with the total hedge fund holdings valued at $3.3 billion. Its largest shareholder is Fisher Asset Management, holding 7.6 million shares valued at $1.1 billion. NVIDIA is one of the best tech stocks to buy according to both hedge funds and retail investors.
7. Adobe Inc. (NASDAQ:ADBE)
Percentage of Invesco QQQ Trust’s Portfolio: 2.15%
Number of Hedge Fund Holders: 92
Adobe Inc. (NASDAQ:ADBE) is a leading digital media and digital marketing solutions company based in California. The company ranks 8th in our list of the best tech stocks to buy according to hedge funds.
In July, Adobe Inc. (NASDAQ:ADBE) released its financial results for Q2 2022. Its revenues increased by 14% y-o-y to $4.4 billion, while its net income increased by 6% y-o-y to $1.2 billion. A normalized EPS of $3.35 was reported for the quarter, beating the consensus by $0.04.
Adobe Inc. (NASDAQ:ADBE) is expected to release its Q3 2022 financial results later on in September. Ahead of the results announcement, Jefferies analyst Brent Thill lowered the firm’s price target on Adobe Inc. (NASDAQ:ADBE) to $475 from $500 while maintaining a ‘Buy’ rating for the shares. The analyst expects the impact of the macro environment to result in lower earnings for the company.
As of Q2 2022, Adobe Inc. (NASDAQ:ADBE) made up 2.15% of Invesco QQQ Trust’s portfolio. A significant number of hedge funds also held a bullish sentiment for Adobe Inc. (NASDAQ:ADBE) shares as 92 out of 895 hedge funds tracked by Insider Monkey held its shares with a total stake value of $7.5 billion. Its largest shareholder was Fisher Asset Management with ownership of nearly 6.2 million shares valued at $2.3 billion.
6. PayPal Holdings, Inc. (NASDAQ:PYPL)
Percentage of Invesco QQQ Trust’s Portfolio: 2.30%
Number of Hedge Fund Holders: 97
San Jose, California-based PayPal Holdings, Inc. (NASDAQ:PYPL) is a technology company focused on the development of digital payments platforms. Its digital payment solutions including PayPal, PayPal Credit, Braintree, Venmo, Xoom, and Paydiant, among others, allow merchants and consumers across the world to connect, transact and complete payments through online platforms or cards. As of Q2 2022, the platforms boasted 429 million active consumer and merchant accounts with $340 billion of total payment volume in the quarter.
In August, PayPal Holdings, Inc. (NASDAQ:PYPL) released its financial results for the quarter ended June 30, 2022. Its revenue increased by 9% y-o-y to $6.8 billion, while it recorded a net loss of $341 million. It recorded a normalized EPS of $0.93, beating the consensus by $0.06.
Earlier in September, BofA analyst Jason Kupferberg increased the price target on PayPal Holdings, Inc. (NASDAQ:PYPL) shares to $114 from $94 and upgraded the rating to ‘Buy’ from ‘Neutral’, expecting upside potential for the digital payments company driven by cost efficiencies and share buybacks.
Despite the inflation induced turbulence in the macroenvironment, PayPal Holdings, Inc. (NASDAQ:PYPL) retained a bullish sentiment from hedge fund investors as of June 30, 2022. 97 of the 895 hedge funds tracked by Insider Monkey held shares of PayPal Holdings, Inc. (NASDAQ:PYPL), valued at $5.2 billion. Fisher Asset Management was the largest shareholder on record with ownership of 17.3 million shares valued at $1.2 billion.
5. Apple Inc. (NASDAQ:AAPL)
Percentage of Invesco QQQ Trust’s Portfolio: 11.27%
Number of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL) is a leading technology company focused on the designing, manufacturing, and marketing of smartphones, personal computers, tablets, wearables, and accessories, and sells a variety of related services.
Major products of Apple Inc. (NASDAQ:AAPL) include the iPhone, Mac PCs, iPad, and accessories while service offerings include Apple Care, Cloud Services, Digital Content and Payment services. iPhone sales accounted for more than half of its revenue in the last fiscal year. The company is expected to launch iPhone 14 in the first week of September which could result in a surge in the company’s revenue.
In July, Apple Inc. (NASDAQ:AAPL) released its financial results for the quarter ended June 25, 2022. Its net sales increased by 2% y-o-y to $83 billion, while its net income declined by 11% y-o-y to $19.4 billion. It reported a normalized EPS of $1.20 for the quarter, beating the consensus by $0.05. Apple Inc. (NASDAQ:AAPL) declared a regular cash dividend of $0.23 per share for the quarter.
Apple Inc. (NASDAQ:AAPL) accounted for the largest allocation for Invesco QQQ Trust and made up for 11.27% of the ETF’s portfolio as of June 30, 2022. Apple Inc. (NASDAQ:AAPL) is also among the favorites of hedge funds, with 128 of the 895 hedge funds tracked by Insider Monkey holding its shares valued at a whopping $143 billion. Warren Buffett’s Berkshire Hathaway is its biggest shareholder owning 895 million shares valued at $122 billion.
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Disclosure: None. 9 Best Tech Stocks to Buy According to Hedge Funds is originally published on Insider Monkey.
