In this article, we will take a detailed look at Billionaire Israel Englander’s Top 10 Stock Picks for 2024.
Billionaire Israel Englander is one of the most notable hedge fund managers in America. He founded Millennium Management back in 1989. Today, the fund’s portfolio is worth over $234 billion. Englander nabbed the top spot in Bloomberg’s list of highest-earning hedge fund managers in 2023, with a whopping $2.8 billion in net earnings including gains from personal investments and fees. Earlier this year, Bloomberg reported that Izzy Englander’s Millennium Management earned $600 million from commodities investments last year. However, in a separate report, the publication said despite installing a new chief of its commodities and making big changes, Millennium’s commodities business is lagging behind Citadel (of billionaire Ken Griffin) which made a whopping $8 billion from commodities in 2022. Bloomberg said, citing sources, that part of the reason why Millennium is struggling to post big gains is billionaire Englander’s imposition of “tight guardrails” to limit losses. To make money in the commodities business, experts say, you have to take risks and give some freedom to traders. But Englander likes to be in control. A Financial Times report earlier this year said Millennium Management manages a whopping $60 billion in assets, employs 5,400 people and has 17 offices. Yet Englander owns 100% of the firm.
The report said, citing a person who works at the fund, that this major concentration is “not a good idea.”
The FT report said Englander’s fund was up 8.3% in 2023 through October, while it returned 12.5% in 2022, 13.6% in 2021 and an impressive 25.9% in 2020.
For this article, we scanned Millennium Management’s Q1 portfolio and picked the fund’s top 10 holdings. 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).
Israel Englander of Millennium Management
10. Salesforce Inc. (NYSE:CRM)
Billionaire Israel Englander’s Stake Value: $620,061,854
Billionaire Israel Englander increased his position in CRM software and Cloud company Salesforce Inc. (NYSE:CRM) by 36% in the first quarter of 2024, ending the quarter with a $620 million stake. Salesforce Inc. (NYSE:CRM) shares recently saw a bloodbath after posting mixed Q1 results and disappointing guidance. However, many Wall Street experts believe the market isn’t pricing in the AI tailwinds for Salesforce Inc. (NYSE:CRM). Mizuho Securities analyst Gregg Moskowitz thinks the company is still “well situated” to help customers in digital transformation. However, the analyst thinks Salesforce Inc. (NYSE:CRM) would do so prioritizing profitable growth. The analyst reiterated his Buy rating on the stock but cut his price target to $300 from $345.
Morgan Stanley analyst Keith Weiss, who has an Overweight rating and a $320 price target on Salesforce Inc. (NYSE:CRM), said that Salesforce’s PEG ratio of 1.2 shows the market is not pricing in operational discipline and earnings growth sustainability.
“We continue to view GenAI as a tailwind for Salesforce, with benefits likely coming in CY25, but at these levels, GenAI represents a call option.”
Salesforce Inc. (NYSE:CRM) is trading at 22x its fiscal 2026 earnings estimate of $10.99, which makes the stock attractively valued given the sector median P/E ratio of 23.85 and Salesforce’s AI growth catalysts. Salesforce Inc.’s (NYSE:CRM) revenue in fiscal 2026 is expected to growth at 9.10% while earnings are forecasted to rise by 11.00%.
Harding Loevner Global Equity Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its first quarter 2024 investor letter:
“Leading software companies have the advantage of high switching costs and the ability to incorporate new features into products customers already use. For example, Microsoft has added its Copilot chatbot functionality to everything from search (Bing Chat, recently renamed to just Copilot) to coding (GitHub Copilot) and workplace applications (Copilot for Microsoft 365). Software sold by Microsoft and other companies such as Salesforce, Inc. (NYSE:CRM), SAP, and ServiceNow are also already deeply integrated into their customers’ operations and workflow.
As large enterprises search for the right balance, Salesforce’s Data Cloud, a flagship offering, is designed to address a critical issue for them so they can make better use of AI tools. After a hectic buildout over the last few years of “data warehouses” and “data lakes”—two types of repositories for storing and processing data—across the various business units of large companies, many companies are left with what feels like islands of trapped data. Data Cloud solves this by creating a single platform to access and leverage all of an enterprise’s data, eliminating the need to constantly duplicate large amounts of information across different platforms. Users are then able to apply generative-AI technology, such as Salesforce’s Einstein tool, to a more comprehensive dataset, which enables them to better glean customers’ intentions, personalize marketing messages, and automate the processing of customer-service requests. As users build these systems, Einstein’s copiloting functionality helps their programmers work more efficiently so that IT departments with limited budgets and manpower can still develop the necessary tools. Salesforce’s management projects that revenue and earnings will climb about 9% and 45%, respectively, in fiscal 2025, citing the company’s operating leverage and cost discipline. We think these figures are achievable given the renewed focus on profitable growth, and so we added to the stock during the quarter.”
9. Eli Lilly & Co (NYSE:LLY)
Billionaire Israel Englander’s Stake Value: $641,290,321
Billionaire Israel Englander’s hedge fund increased its hold in Eli Lilly & Co (NYSE:LLY) by 10% in the first quarter of 2024, concluding the period with a $641.3 million stake in the company that’s persistently on investors’ radar these days amid weight loss-related growth catalysts. Goldman Sachs recently said in a report that estimated global sales from next-gen obesity drugs could reach $130 billion in 2030, up from its previous estimate of $100 billion. Goldman Sachs highlighted that Eli Lilly & Co (NYSE:LLY) and Novo Nordisk are expected to retain their “duopoly” in the market with an 80% market share through 2030.
Eli Lilly & Co (NYSE:LLY) shares are trading at a P/E of 123, much higher than its 5-year average of 50 and industry median of 33. However, Eli Lilly & Co (NYSE:LLY) blockbuster weight loss drugs like Mounjaro and Zepbound and their growth potential coupled with raging demand for weight loss drugs back this high valuation, according to several market analysts. Last month, Eli Lilly & Co (NYSE:LLY) shares skyrocketed after its diabetes treatment Mufengda® (Tirzepatide Injection) got approval in China which is amongst the countries with the highest recorded cases of diabetes.
Eli Lilly & Co (NYSE:LLY) is expected to see about 120% earnings growth this year and 40% earnings growth next year. Analysts at BofA see Eli Lilly & Co’s (NYSE:LLY) earnings more than doubling this year. The stock is trading at 43x its 2025 EPS estimate of $19.28 set by Wall Street. Eli Lilly’s revenue growth in 2025 could come in at 23.40%, based on data from Yahoo Finance. This high growth in earnings and revenue is more than enough to justify Eli Lilly & Co’s (NYSE:LLY) current stock price, given the company’s market-leading position in the weight loss market.
Baron Health Care Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its first quarter 2024 investor letter:
“Eli Lilly and Company (NYSE:LLY) is a global pharmaceutical company that discovers, develops, manufactures, and sells medicines in the categories of diabetes, oncology, neuroscience, and immunology, among other areas. Stock performance was strong due to robust fourth quarter sales of Mounjaro/ Zepbound, better-than-anticipated initial guidance for fiscal year 2024, and ongoing enthusiasm surrounding the company’s obesity and diabetes franchises. We continue to think Lilly is well positioned to grow revenue and earnings at attractive rates through the end of the decade and beyond.”
8. Alphabet Inc. (NASDAQ:GOOG)
Billionaire Israel Englander’s Stake Value: $820,337,453
Alphabet Inc. (NASDAQ:GOOG) is apparently in a no-holds-barred fight against competitors in the AI race that according to many threatened the bread and butter of Google its search business. However, many analysts believe Alphabet Inc. (NASDAQ:GOOG) is making a big turn and will continue to grow. Alex Kantrowitz, Big Technology founder, while talking to CNBC last month, said that the present for Alphabet Inc. (NASDAQ:GOOG) is looking “real good” amid revenue growth, leadership’s harsh stance against those “making trouble” insider the company, dividends and buybacks.
Latest data analyzed by Bank of America shows that across all devices, Alphabet Inc.’s (NASDAQ:GOOG) market search in search actually gained half a percentage point in May on a MoM basis. BofA analyst Justin Post said this shows Alphabet Inc.’s (NASDAQ:GOOG) AI Overviews are “aiding query growth and usage.”
Analysts also believe Alphabet Inc. (NASDAQ:GOOG) is in a strong position to offset any headwinds or lost market share in Google search with YouTube, which saw its ads revenue reach $8.1 billion in the first quarter, a 21% growth. Alphabet Inc.’s (NASDAQ:GOOG) net income in the period came in at $23.66 billion, up 57%, or $1.89 per share.
Alphabet Inc. (NASDAQ:GOOG) bulls believe the market is not incorporating the company’s growth in Cloud, Other Bets, Video and other high growth initiatives. The stock is trading 20x Alphabet’s 2025 EPS estimate of $8.57. This multiple makes the stock look attractively valued since the Wall Street expects Alphabet Inc. (NASDAQ:GOOG) earnings to grow by 13.40% in 2025 and by 19% over the past five years on a per annum basis.
Lakehouse Global Growth Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its April 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) delivered a strong quarterly result that came in well ahead of analysts’ expectations. Revenue grew 15.4% (16.0% constant currency) to $80.5 billion and operating income grew 46.0% to $25.5 billion. Revenue growth accelerated across Search, YouTube Ads, and Google Cloud, all whilst the company delivered its highest operating margin since 2021 – showing meaningful progress in the company’s efforts to durably re-work their cost structure. On the Generative AI front, management emphasised the company’s infrastructure advantages including 5th generation TPUs(chips developed by Google specifically for AI training and inference), high performance data centre architecture, and AI models that are 100x more efficient versus 18 months ago. Overall, we believe that Alphabet is well placed for the AI opportunity ahead and still has significant latent earnings power. When combined with a relatively undemanding valuation of 21x forward net profit and over $100 billion of cash on the balance sheet, it’s not hard to see why we remain positive on the range of outcomes in the years ahead.”
7. KKR & Co. Inc. (NYSE:KKR)
Billionaire Israel Englander’s Stake Value: $921,662,818
Billionaire Israel Englander decreased his stake in KKR & Co. Inc. (NYSE:KKR) by 3% in the first quarter of 2024, closing the quarter with a $921 million stake in the company. KKR & Co. Inc. (NYSE:KKR) shares have gained about 81% over the past one year as investors flock to private equity and alternative investments as stock markets become volatile by the day. At its investor day event in April, KKR & Co. Inc. (NYSE:KKR) management said the company expects its adjusted EPS to double from current level by 2026 in the range of $7.00 to $8.00 per share. Over a 10-year horizon, Adj. EPS will reach $15, almost 5 times the current value. KKR & Co. Inc. (NYSE:KKR) also expects to rake in $300 million in dividend income by 2026.
KKR & Co. Inc. (NYSE:KKR) is trading at a forward PEG ratio of 0.82, lower than the sector median of 1.14. The stock is trading at around 16.28X its 6.11 EPS estimate for 2025 set by Wall Street. With expected revenue growth in 2025 at 32.30% and earnings growth of 29.70%, KKR & Co. Inc. (NYSE:KKR) appears to be an undervalued play. Average analyst price estimate for KKR & Co. Inc. (NYSE:KKR) is $118, which presents an 18% upside potential from the current levels.
Vulcan Value Partners stated the following regarding KKR & Co. Inc. (NYSE:KKR) in its first quarter 2024 investor letter:
“KKR & Co. Inc. (NYSE:KKR), a large alternative investment manager, continues to execute well and was a material contributor for the second consecutive quarter. The company reported increased fundraising during the quarter and macro factors are becoming more favorable for the firm. We continue to believe that KKR is well-positioned for the future.”
6. Microsoft Corp (NASDAQ:MSFT)
Billionaire Israel Englander’s Stake Value: $1,176,438,300
Microsoft Corp (NASDAQ:MSFT) is strongly positioned to benefit from the AI revolution sweeping across both software and hardware industries. The stock has a new growth catalyst in the form of AI PCs. Piper Sandler analysts Brent Bracelin, Hannah Rudoff and J.R. Herrera recently said in a note that Copilot Plus PCs could “spark a long-anticipated PC upgrade cycle.” They have a $465 price target with an Overweight rating on the stock.
During the fiscal third quarter, Microsoft Corp’s (NASDAQ:MSFT) revenue jumped 17% year over year to $61.85 billion, while its adjusted EPS saw growth of 20%. Microsoft Corp’s (NASDAQ:MSFT) Intelligent Cloud revenue growth came in at 21% on a YoY basis. Microsoft Corp’s (NASDAQ:MSFT) Cloud market share also grew to 25%, and the company is slowly but surely catching up to Amazon, which has about 31% market share. Analysts believe Microsoft Corp’s (NASDAQ:MSFT) AI ecosystem around its products would strengthen its Cloud division thanks to the company’s integration of AI into its Cloud products. Microsoft Corp’s (NASDAQ:MSFT) Intelligent Cloud segment’s profit in the latest quarter totaled $12.51 billion, a whopping 32% growth on a YoY basis.
Microsoft Corp’s (NASDAQ:MSFT) huge investments to revive its Search business are also working. Bing’s market share has jumped to 3.64% as of April 2024, a 0.88 points gain on a YoY basis.
Wall Street expects Microsoft Corp’s (NASDAQ:MSFT) earnings to grow 12.50% next year. Based on the growth catalysts mentioned above, the stock’s forward P/E of 31 based on 2025 EPS makes it look attractive at the current levels. Average analyst estimate for Microsoft Corp (NASDAQ:MSFT) is $483, which presents a 14% upside potential from the current levels.
Baron Fifth Avenue Growth Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its first quarter 2024 investor letter:
“Our second largest purchase during the quarter was the software platform, Microsoft Corporation (NASDAQ:MSFT), which we continued to add to, after initiating a position in the fourth quarter of 2023. Microsoft continues to report strong quarterly results, with revenue growth of 16% year-over-year in constant currency thanks to better-than-expected demand in its intelligent cloud segment, which saw revenue growth of 19% year-over-year, driven by Azure growth of 28% with AI contributing 6pts to growth compared with 3pts in the prior quarter. While the adoption of GenAI remains in its early stages, Microsoft has disclosed positive initial data points with 53,000 Azure AI customers as of its December quarter up from 18,000 in the prior quarter, 1.3 million paid GitHub Copilot subscribers (up 30% sequentially) and more than 230,000 organizations who have used AI capabilities in the power platform (up 80% sequentially). Management also noted that large cloud optimizations that started a year or so ago have largely finished. Profitability also continues to be strong with 44% non-GAAP operating margins, which was 120bps better than expected.”
5. Meta Platforms Inc. (NASDAQ:META)
Billionaire Israel Englander’s Stake Value: $1,196,554,582
Raymond James recently upgraded Meta Platforms Inc. (NASDAQ:META) shares citing the company’s generative AI ambitions. The firm’s analyst Josh Beck increased his price target on the stock to $550 from $525. Why is Meta Platforms Inc. (NASDAQ:META) a promising AI stock? The social media giant is using AI for optimizing ad targeting and recommendation systems to boost engagement and ads revenue. In the first quarter, Meta Platforms Inc’s (NASDAQ:META) revenue jumped 27% to $36.5 billion. A whopping 97% of this revenue came courtesy of ads. In 2024, Meta Platforms Inc’s (NASDAQ:META) ads revenue is expected to rise by 17%. Reels, which is posting solid numbers and engagement lately, saw a 20% ad load in the first quarter, compared with 16.2% in the same quarter last year. Meta Platforms Inc (NASDAQ:META) recently posted speculator Q1 results but the stock slipped after the company revealed that Meta Platforms Inc’s (NASDAQ:META) CapEx will come in the range of $35 billion to $40 billion, higher than the previous forecast of $30 billion to $37 billion. However, long-term analysts believe since most of this spending will go into AI projects, it’ll bode well for the stock down the road.
Based on its 2025 EPS estimate of $23.11 set by Wall Street, Meta Platforms Inc. (NASDAQ:META) is trading at a forward P/E of 21, which makes the stock attractively valued given Meta’s earnings are expected to grow 14.50% next year and by 30% over the next five years on a per-annum basis.
RiverPark Large Growth Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its first quarter 2024 investor letter:
“Meta Platforms, Inc. (NASDAQ:META): Meta was a top contributor in the quarter following fourth quarter earnings results in which the company reported accelerating revenue growth and expanding margins driven by a rebound in online advertising and strong user growth. On February 2nd, Meta reported 4Q23 revenue of $40.1 billion (+25% y/y up from +23% in 3Q23) and EPS of $5.33 (+203% y/y), and the midpoint of 1Q24 revenue guidance was $35.8 billion (+25% y/y), all well ahead of investors’ expectations. The company reported impressive revenue acceleration in its core advertising businesses, including new products like Reels and Threads. Advertiser adoption of Meta’s AI targeting tools helped drive strong ROI and higher spend across multiple categories.
META owns multiple social media platforms, each with more than one billion users, has an 81% gross margin, and generated $44 billion of FCF in 2023. Both its Facebook and its Instagram franchises have more than 2 billion Daily Active Users and generate the bulk of the company’s revenue. Recently, the company’s short form video offering, Reels, and public text-sharing app, Threads, achieved mass user engagement and growing advertiser adoption which have helped return the company to strong revenue and free cash flow growth. Even after the recent stock price advance, META shares trade at 20x Wall Street’s consensus estimates for 2025 EPS, estimates that we think could prove to be too low.”
4. Nvidia Corp (NASDAQ:NVDA)
Billionaire Israel Englander’s Stake Value: $1,213,332,896
Nvidia Corp (NASDAQ:NVDA) is getting several bullish calls from the Wall Street lately. Bank of America recently added Nvidia Corp (NASDAQ:NVDA) shares to its US 1 List. The list includes BofA’s best investment ideas consisting of buy-rated stocks trading in the US. Nvidia Corp’s (NASDAQ:NVDA) latest product announcements and its plans revealed at Computex show that the company has much more in its arsenal to power its growth engine. Analysts believe Nvidia Corp’s (NASDAQ:NVDA) shift to new AI architecture known as Rubin (R100) and its powerful H100 and Blackwell chips easily beat competitors.
Nvidia Corp (NASDAQ:NVDA) will start shipping H200 in the second half of this year. At its GTC conference Nvidia Corp (NASDAQ:NVDA) revealed three accelerators – B200, GB200 and GB200 NVL72. All of these products provide growth catalysts for Nvidia Corp (NASDAQ:NVDA) shares and justify its P/E multiple of 71, given the company’s growth expectation of over 100% this year and 32% next year. Based on 2026 EPS estimate set by Wall Street, Nvidia Corp (NASDAQ:NVDA) is trading at a forward P/E multiple of 35.74, which makes the stock’s valuation attractive given the growth catalysts it has.
RiverPark Large Growth Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its first quarter 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA): NVDA shares were our top contributor in the quarter following blowout 4Q results and 1Q guidance driven by strong data center sales. The company reported quarterly revenue of $22.1 billion, up 265% year-over-year, and EPS in the quarter of $5.16, up 487% year-over-year and 12% ahead of expectations. Revenue guidance for 1Q of $24 billion was 8% above very high expectations. The artificial intelligence arms race kicked-off by ChatGPT and Alphabet’s Bard, among others, has generated tremendous demand for Nvidia’s next generation graphic processors.
NVDA is the leading designer of graphics processing units (GPU’s) required for powerful computer processing. Over the past 20 years, the company has evolved through innovation and adaptation from a predominantly gaming-focused chip vendor to one of the largest semiconductor/software vendors in the world. Over the past decade, the company has grown revenue at a compound annual rate of over 20% while expanding operating margins and, through its asset light business model, producing ever increasing amounts of free cash flow. Following recent results, Jensen Huang, founder and CEO of NVIDIA stated in the company’s press release, “a trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.”
3. Apple Inc. (NASDAQ:AAPL)
Billionaire Israel Englander’s Stake Value: $1,311,099,383
Apple Inc. (NASDAQ:AAPL) has finally entered the AI party with a bang, announcing new AI plans that many believe would create a strong ecosystem around the company’s software and hardware products. As a result, Apple Inc. (NASDAQ:AAPL) shares added over $215 billion in market cap and closed at a record high on June 11. TF International Securities analyst Ming-Chi Kuo said in a fresh note that Apple has a competitive edge over others with its on-device AI.
“Consumers may find purchasing Microsoft’s AI PC confusing (calculating whether it reaches 40 TOPS before purchase), whereas Apple directly tells consumers which models can support Apple Intelligence. Regardless of whether on-device AI applications meet consumer needs, Apple has a clear selling advantage from the start,” Kuo said.
Apple Inc. (NASDAQ:AAPL) is trading at 27x its 2025 EPS estimate, which is still a high multiple given the company’s 9.60% growth estimate for 2025 and 10.50% per-annum growth expected over the next five years. But all of that could change if Apple is able to actually implement and convert the AI features it recently announced at WWDC.
Dan Ives of Wedbush, one of the biggest Apple bulls, recently said that Apple Inc. (NASDAQ:AAPL) will be able to create an ecosystem around its AI offerings and the company would see a $30 to $40 per share surge because of its AI products. Ives has a $275 price target on Apple Inc. (NASDAQ:AAPL) shares.
The first signs of Apple Inc.’s (NASDAQ:AAPL) AI capabilities are here. Last month, the company revealed new M4-powered iPad Pro and claimed that its devices, powered by Neural Engine, will be “more powerful than any neural processing unit in any AI PC today.” Apple Inc.’s (NASDAQ:AAPL) Neural Engine is the company’s neural processing unit (NPU) that accelerates AI workloads.
Notable Wall Street analyst and Deepwater Asset Management Managing Partner recently made waves when he said in a post on Twitter that Apple Inc. (NASDAQ:AAPL) is a better investment than Nvidia for the long term. Munster believes “owning Apple Inc. (NASDAQ:AAPL) over the next year will have a higher return because the market is in denial about Apple’s AI potential.
RiverPark Large Growth Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its first quarter 2024 investor letter:
“Apple Inc. (NASDAQ:AAPL): Apple shares were a top detractor in the quarter. The company’s stock was pressured by negative news items including a government antitrust case, an Apple Watch patent dispute, and slowing China iPhone sales. Ultimately the company’s fiscal 1Q24 earnings report delivered a slightly better than expected quarter, but with guidance that disappointed investors. 1Q24 revenue and gross margin were better than feared, buoyed by stronger than expected worldwide iPhone sales which grew 6% despite a slight decline in China iPhone sales. Services revenue in the quarter was as expected and signaled the third quarter in a row of accelerating growth. Gross margins were also stronger than expected at 45.9%, the highest level in more than a decade. Guidance of $90 billion of revenue for 2Q24 was light however, due to weaker than expected iPhone sales in the current period and year-over-year declines in other hardware products facing difficult year-over year comps.
Although near-term trends are a bit muted, Apple is carrying lean inventory into an iPhone refresh cycle later this year. With an installed base of 2.2 billion active devices and significant growth of the company’s recurring revenue Services segment, we believe that Apple remains one of the most innovative, best positioned and most profitable companies in the mobile technology industry.”
2. Merck & Co. Inc. (NYSE:MRK)
Billionaire Israel Englander’s Stake Value: $1,328,664,191
Merck & Co. Inc. (NYSE:MRK) is one of the most promising stocks in billionaire Israel Englander’s Q1 portfolio. Millennium Management increased its position in the biotech company by 67% in the March quarter, ending the period with a $1.3 million stake. In April, Merck & Co. Inc. (NYSE:MRK) posted solid Q1 results and increased its full-year guidance driven by about 20% YoY rise in sales for its blockbuster cancer medicine Keytruda. Wall Street expects Merck & Co. Inc. (NYSE:MRK) 2025 EPS to come in at $9.95. Based on the stock’s current price, Merck & Co. Inc.’s (NYSE:MRK) forward P/E ratio is 13.13, compared to the industry average of 19.79 and lower than Merck’s 5-year average P/E of 18.67. Wall Street expects Merck & Co. Inc.’s (NYSE:MRK) revenue to jump 7.30% while earnings growth is expected to clock in at 15.00%. Wall Street estimates suggest Merck’s EPS will grow to $12.5 by the end of fiscal year 2028. This translates to a CAGR of 7.6% between fiscal years 2024 and 2028.
Analysts believe Merck & Co. Inc. (NYSE:MRK) has done a decent job at diversifying its drug portfolio and expanding across different geographies. The company makes money from vaccines and immunotherapy drugs
Sales growth momentum of Keytruda is also expected to continue as the drug is patent-protected until 2028. Merck & Co. Inc. (NYSE:MRK) is also investing heavily into R&D to make new drugs for unmet medical needs, such as oncology and immuno-oncology. Average analyst price estimate for Merck & Co. Inc. (NYSE:MRK) is $142, which presents a 12% upside potential from the current levels.
Carillon Eagle Mid Cap Growth Fund made the following comment about Merck & Co., Inc. (NYSE:MRK) in its Q3 2023 investor letter:
“Merck & Co., Inc. (NYSE:MRK) underperformed in the third quarter, based on what we view as largely macroeconomic-related factors. The company continues to execute well, both clinically and fundamentally, but much of the biopharmaceutical industry has been weak as investors are gravitating to other, more cyclical sectors.”
1. Amazon.com Inc (NASDAQ:AMZN)
Billionaire Israel Englander’s Stake Value: $1,779,205,187
Amazon.com Inc (NASDAQ:AMZN) is becoming an AI power house thanks to its AWS business, which saw operating margins cross 37% during the first quarter. AWS operating margins have now came in more than 30% for the past five straight quarters. Amazon.com Inc’s (NASDAQ:AMZN) revenue in the first quarter jumped 12.5% YoY and its adjusted EPS more than tripled. Revenue in North America and International segments grew as well. Analysts believe digital ads is another strong revenue stream for Amazon.com Inc (NASDAQ:AMZN), with revenue from the segment increasing 24% YoY to $11.8 billion in the first quarter.
However, Amazon.com Inc (NASDAQ:AMZN) skeptics believe the stock has run too much as its valuation is high. For value-conscious investors the market is indeed teeming with other opportunities. If you are looking for an AI stock that is as promising as AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Amazon.com Inc (NASDAQ:AMZN) replaced MSFT to take the spot of the most popular stock among the over 900 hedge funds tracked by Insider Monkey. A total of 302 hedge funds reported owning stakes in Amazon.com Inc (NASDAQ:AMZN).
Baron Fifth Avenue Growth Fund stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its first quarter 2024 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest retailer and cloud services provider. Shares increased 18.7% on quarterly results that exceeded consensus expectations, with revenue growth of 13% year-over-year and operating margins of 7.8% (up from 1.8% a year ago). We believe that Amazon is well positioned in the short to medium term to continue improving its core North American margins, which have reached 6.1% in the fourth quarter, the seventh straight quarter of margin improvement and an overall improvement of 800bps. Amazon has been rearchitecting its fulfillment network, improving efficiency, reducing cost-to-serve and accelerating delivery speeds thanks to initiatives such as regionalization, with the number of items delivered during the same day or overnight increasing by nearly 70% year-over-year. Reducing the cost to serve also enables Amazon to sell lower priced items and expand its addressable market to everyday purchases. Additionally, Amazon continues to benefit from its fast-growing, margin-accretive advertising business winning market share in digital advertising thanks to its structural advantages of a closed loop system, which enables a deterministic calculation of Return on Ad Spending. We also believe that e-commerce still has long duration growth ahead as it still accounts for less than 15% of retail. Similarly, Amazon’s cloud service, AWS, remains relatively early in its S-curve with cloud representing around 13% of worldwide IT spending13 incremental tailwinds across the three layers of the GenAI stack – infrastructure with NVIDIA’s own AI chips (Trainium and Inferentia) as well as with its offering of NVIDIA chips, platform (Bedrock), and applications (first and third party).”
While we acknowledge the potential of Amazon, our conviction lies in the belief that smaller, 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 as promising as AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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