Billionaire Ray Dalio’s Top 5 Technology Stock Picks

In this article, we will discuss billionaire Ray Dalio’s top 5 technology stock picks. If you want to explore similar stocks, you can also read Billionaire Ray Dalio’s Top 10 Technology Stock Picks.

5. QUALCOMM, Incorporated (NASDAQ:QCOM)

Bridgewater Associates’ Stake Value: $68,637,000

Percentage of Bridgewater Associates’ 13F Portfolio: 0.34%

QUALCOMM, Incorporated (NASDAQ:QCOM) is the world leader in next-generation wireless technologies. The company’s products and services include chipsets, modems, and software solutions for a variety of wireless applications, including smartphones, tablets, laptops, automobiles, the Internet of Things, and wearables. As of September 30, Bridgewater Associates has a stake worth $68.6 million in QUALCOMM, Incorporated (NASDAQ:QCOM) and the stock is one of Ray Dalio’s top tech stock picks.

On November 2, QUALCOMM, Incorporated (NASDAQ:QCOM) posted earnings for the fourth quarter of fiscal 2022. The company reported earnings per share of $3.13 and generated a revenue of $11.39 billion, up 22.17% year over year, and ahead of Wall Street consensus by $19.96 million. The company has a strong balance sheet, with abundant free cash flows and low debt levels. QUALCOMM, Incorporated (NASDAQ:QCOM) has free cash flows of $6.8 billion and a debt-to-equity ratio of 0.85.

On November 3, Cowen analyst Matthew Ramsay revised his price target on QUALCOMM, Incorporation (NASDAQ:QCOM) to $165 from $185 and maintained an Outperform rating on the shares.

4. Microsoft Corporation (NASDAQ:MSFT)

Bridgewater Associates’ Stake Value: $74,299,000 

Percentage of Bridgewater Associates’ 13F Portfolio: 0.37%

Microsoft Corporation (NASDAQ:MSFT) is a cash-rich and profitable company that has a track record for delivering shareholder value. The company has a trailing twelve-month operating margin of 41.69% and an ROE of 42.88%. Moreover, Microsoft Corporation (NASDAQ:MSFT) has free cash flows of $63.3 billion and a debt-to-equity ratio of 0.28. The stock is among Ray Dalio’s top technology stock picks and as of September 30, Bridgewater Associates has a position worth $74.2 million in the company.

On October 25, Microsoft Corporation (NASDAQ:MSFT) announced earnings for the first quarter of fiscal 2023 in which it beat both EPS and revenue estimates. The company reported an EPS of $2.35 and outperformed expectations by $0.04. The company’s revenue for the quarter amounted to $50.12 billion, up 10.60% year over year, and ahead of Wall Street estimates by $435.21 million.

Shortly after the company’s earnings release, Oppenheimer analyst Timothy Horan updated his price target on Microsoft Corporation (NASDAQ:MSFT) to $265 from $275 and maintained an Outperform rating on the shares.

Here is what Alger Capital had to say about Microsoft Corporation (NASDAQ:MSFT) in its third-quarter 2022 investor letter:

“Microsoft Corporation (NASDAQ:MSFT) is a positive dynamic change beneficiary of corporate America’s transformative digitization. Microsoft CEO expects technology spending as a percent of gross domestic product (GDP) to jump from about 5% now to 10% in 10 years and that Microsoft will continue to capture market share within the technology sector.

Microsoft’s shares underperformed during the period because the company slightly missed analysts’ estimates. The miss was due to foreign currency headwinds, weakening small business and consumer demand, and decreasing advertising activity. However, Microsoft showed that despite consumer, advertising, and small and medium business weakness; the company’s main business, the digitization of corporate America, continues to grow. We believe the secular forces of cloud adoption (azure and office 365) remain resilient, and the company’s commercial bookings growth attest to the continued demand for digital transformation.”

3. Baidu, Inc. (NASDAQ:BIDU)

Bridgewater Associates’ Stake Value: $108,238,000

Percentage of Bridgewater Associates’ 13F Portfolio: 0.54%

Baidu, Inc. (NASDAQ:BIDU) is a leading Chinese search engine operator and provider of Internet-related services. Baidu, Inc. (NASDAQ:BIDU) has a dominant market share in China’s search engine market and its strong brand and loyal user base make it a beneficiary of China’s rapidly growing Internet economy. Baidu, Inc. (NASDAQ:BIDU) is well-positioned to benefit from the continued growth of the Chinese economy and the expansion of the Internet in China.

Baidu, Inc. (NASDAQ:BIDU) has a strong cash position and a healthy balance sheet with low debt levels. The company has free cash flows of CNY 6.4 billion and a debt-to-equity ratio of 0.40. As of September 30, Bridgewater Associates has stakes worth $108.2 million in the company.

This November, Barclays analyst Jiong Shao updated his price target on Baidu, Inc. (NASDAQ:BIDU) to $139 from $146 and maintained an Overweight rating on the shares.

Here is what Baron Funds had to say about Baidu, Inc. (NASDAQ:BIDU) in its third-quarter 2022 investor letter:

“As part of our digitization theme, we reiterate our conviction in Baidu, Inc. (NASDAQ:BIDU) and InPost S.A. Baidu is a leading Chinese artificial intelligence company, which, in our view, is trading well below intrinsic value due to short-term economic and geopolitical uncertainties. We expect significant long-term upside given the company’s strong competitive position across several of China’s key growth industries. Baidu’s mobile ecosystem, which includes China’s dominant search engine, has over 620 million monthly active users. In our view, this ecosystem will benefit from the secular growth of China’s digital advertising industry, as well as the expansion of searchable content from established social media and e-commerce platforms resulting from recent regulatory reforms regarding data interoperability. Beyond its core search business, Baidu has invested heavily in cutting-edge technologies including cloud, autonomous driving, smart devices, and AI semiconductor chips. The company’s cloud business is one of the largest and fastest growing in China and is differentiated by its AI solutions and higher-value PaaS/SaaS offerings. Baidu has also developed leading autonomous driving technologies that it is commercializing through partnerships with top-tier Chinese auto manufacturers. We expect the company to sustain solid double-digit earnings growth over the next three to five years.”

2. Meta Platforms, Inc. (NASDAQ:META)

Bridgewater Associates’ Stake Value: $112,426,000

Percentage of Bridgewater Associates’ 13F Portfolio: 0.56%

On October 26, Meta Platforms, Inc. (NASDAQ:META) posted earnings for the third quarter of fiscal 2022. The company reported an EPS of $1.64 and generated a revenue of $27.71 billion, ahead of Wall Street consensus by $313.82 million. As of September 30, Ray Dalio’s Bridgewater Associates has a position worth $112.4 million in Meta Platforms, Inc. (NASDAQ:META) and the stock is one of Ray Dalio’s top tech stock picks.

Meta Platforms, Inc. (NASDAQ:META) is presenting an attractive buying opportunity for long-term investors and is trading at a PE multiple of 10x, as of November 14. The company is profitable and also efficient at making profits for shareholders. Meta Platforms, Inc. (NASDAQ:META) has a trailing twelve-month operating margin of 30.09% and an ROE of 22.40%.

This November, Baird analyst Colin Sebastian reiterated an Outperform rating on Meta Platforms, Inc. (NASDAQ:META) and his $150 price target. On November 9, Itau BBA analyst Thiago Kapulskis raised his price target on Meta Platforms, Inc. (NASDAQ:META) to $120 from $102 and maintained an Outperform rating on the shares.

Here is what  Distillate Capital Partners LLC had to say about Meta Platforms, Inc. (NASDAQ:META) in its third-quarter 2022 investor letter:

“The largest exited positions in the quarter includes Meta Platforms, Inc. (NASDAQ:META). Meta saw its free cash estimates deteriorate enough that its valuation fell below the threshold for inclusion. Similar to our prior presentations, one way to visualize the current portfolio and note recent changes versus the benchmark is to look at scatter plot of all of Distillate’s FSV holdings versus those in the benchmark with valuation on the vertical axis and free cash ϲow stability on the horizontal axis.”

1. Alphabet Inc. (NASDAQ:GOOG)

Bridgewater Associates’ Stake Value: $140,194,000

Percentage of Bridgewater Associates’ 13F Portfolio: 0.70%

Alphabet Inc. (NASDAQ:GOOG) is a technology powerhouse that continues to dominate in search, advertising, and AI. As of September 30, Bridgewater Associates has stakes worth $140.19 million in Alphabet Inc. (NASDAQ:GOOG) and the investment covers 0.70% of the fund’s 13F portfolio. The stock is one of Ray Dalio’s top technology stock picks and also among his top 13F holdings.

This October, KeyBanc analyst Justin Patterson revised his price target on Alphabet Inc. (NASDAQ:GOOG) to $120 from $125 and reiterated an Overweight rating on the shares.

Alphabet Inc. (NASDAQ:GOOG) is a company with a track record of outperformance and delivering shareholder value. The company has free cash flows of $62.5 billion. Moreover, the company has a trailing twelve-month operating margin of 27.85% and an ROE of 26.89%. Alphabet Inc. (NASDAQ:GOOG) also has low debt levels and according to its balance sheet, the company has a debt-to-equity ratio of 0.05, as of September 30.

Here is what Mayar Capital had to say about Alphabet Inc. (NASDAQ:GOOG) in its third-quarter 2022 investor letter:

“In early January this year – which admittedly feels like eons ago – US President Joe Biden was pushing Americans to take up the government’s offer of free COVID tests to help tackle the surging omicron variant. How did Biden respond when citizens asked about the availability of these tests?

“Google it!”

This advice, undoubtedly well-meant, was roundly scoffed at by the press, however. It seemed too obvious to be very helpful.

Anyway, the anecdote serves to introduce you to one of our largest holdings, Alphabet; the parent company of Google. Note that first, Alphabet’s original and core product – its search engine – has entered our common vocabulary as a verb. ‘Googling’ something has the same meaning as ‘researching’ or ‘finding an answer to’ something. Second the reason Biden’s advice was met with such opprobrium was because Googling something has become almost second nature to us now.

These two observations reveal a lot about Google’s strength in the search engine market, in which it has a share of over 90 percent. Because internet search is almost the prototypical network, Google has benefitted from – and we think is also protected by – the huge competitive advantage its scale brings – both to those asking the questions and those providing the answers. The Google search platform becomes increasingly useful to anyone seeking information as a greater volume of stuff becomes available. This starts a virtuous cycle that results in a colossal market share for Google itself. In the language of business strategists, Google benefits from vast network effects.

Because Google’s search results are viewed by billions of eyeballs every day, its search page ‘real estate’ is understandably very valuable to those with goods and services to sell. Advertising revenues from this ‘real estate’ as well as that from its other properties such as Mail, Maps, and so on, totaled almost USD 150b in 2021; amounting to almost 58% of the company’s revenues. Ad sales on YouTube, also owned by Alphabet, brought in another USD 28b. With the secular shift of the advertising spend to digital channels – over which Alphabet has a tight grip – we estimate the company has a share of around 40% of the digital advertising market and is probably the most valuable advertising property in the world…” (Click here to see the full text)

You can also take a look at Biggest ESG Companies in the World and 15 Most Valuable NASDAQ Companies.

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