This article lists the 10 recent stock recommendations by ChatGPT.
ChatGPT has quickly become an essential tool for both professional and personal use, thanks to its human-like responses. Analysts are also exploring its potential for stock picking, using criteria like low P/E ratios to find undervalued stocks. While some question the reliability of ChatGPT for providing accurate and up-to-date information, a study from the University of Florida suggests that ChatGPT can predict stock price movements more accurately than some basic analysis models.
OpenAI recently made a major leap by launching GPT-4o, a new AI model, alongside a desktop version of ChatGPT and an updated user interface. This update brings GPT-4 to all users, including those on the free tier, with enhanced speed and capabilities in text, video, and audio. The “o” in GPT-4o stands for “omni,” indicating its ability to support 50 languages and be available via APIs, allowing developers to start building applications with the new model right away.
The S&P 500 and NASDAQ are on track for their tenth consecutive positive session, driven by the same bullish factors that have propelled the market throughout the year. Inflation continues to trend downward, raising expectations that the Federal Reserve will cut interest rates in September. This potential for rate cuts supports the market by fostering conditions that could lead to a soft economic landing.
Ed Clissold, Ned Davis Research chief U.S. strategist, told CNBC that quarterly earnings growth has consistently accelerated over the past few quarters, with Q2 showing strong results and Q3 expected to follow suit. This steady growth suggests no significant changes in the underlying market thesis, keeping investor sentiment positive.
Despite the recent volatility seen in August, which was partly driven by a spike in market uncertainty and liquidity issues, analysts do not expect this to carry over into September. The possibility of rate cuts by the Fed is providing a solid foundation for the market, though there are some concerns about elevated earnings estimates for Q3 and the upcoming election.
The Dow Jones Industrial Average is close to an all-time high, with stocks like Travelers, Boeing, and 3M leading the charge. Analysts predict a broad market advance, with potential for catch-up in sectors that have lagged behind this year. As interest rates are likely to come down, the market rally could broaden beyond just AI and mega-cap growth stocks.
Looking ahead to next week, key economic data will be in focus, including PCE data on Friday and consumer spending insights on Tuesday. Investors are hoping for “Goldilocks” economic data—not too hot, not too cold—that would confirm the Fed’s rate cut path without signaling an economic downturn. The market favors moderate economic growth, which would support continued stock market gains.
In a world overwhelmed by information, ChatGPT offers a solution for investors. Its natural language processing capabilities allow it to sift through vast amounts of data and provide concise, actionable summaries, helping investors make informed decisions. By reducing information costs and democratizing financial knowledge, ChatGPT is becoming an invaluable tool for individual investors.
A close-up of a laptop monitor with stock market prices scrolling up and down.
Our Methodology
For this article we prompted ChatGPT multiple times to recommend stocks, based on the data as of its knowledge cutoff date. ChatGPT recommended 10 stocks based on “historical trends” and the “market landscape” from various sectors which have “substantial” potential over the next few years. We shortlisted the stocks that were recommended the most and then further selected the ones that were the most widely held by hedge funds. We have sorted these stocks based on the number of hedge fund investors as of Q2 2024.
10. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 80
Johnson & Johnson (NYSE:JNJ) is a major player in the healthcare sector with a strong record of innovation and financial performance facing significant changes in 2024. The Inflation Reduction Act (IRA), allows Medicare to negotiate drug prices, and three of Johnson & Johnson’s major drugs—Xarelto, Stelara, and Imbruvica—are included in the first round of negotiations. The price of Xarelto will drop by 62% to $197 per month, Stelara’s will fall by 66% to $4,695, and Imbruvica will decrease by 38% to $9,139. These new prices will take effect in 2026.
Xarelto, Stelara, and Imbruvica contributed 19% of Johnson & Johnson’s revenue in Q2, but sales for Xarelto and Imbruvica have recently declined, while Stelara’s sales have grown. The company anticipates that the impact of these price cuts will be manageable, especially as it continues to face competition and challenges. With additional rounds of IRA negotiations potentially targeting more drugs, Johnson & Johnson might see further impact.
Additionally, the firm has agreed to a $700 million settlement for lawsuits related to its talcum powder, which will impact its balance sheet for years. In August, Johnson & Johnson (NYSE:JNJ) received approval to proceed with bankruptcy proceedings as part of its $6.4 billion settlement for talcum powder-related lawsuits. Furthermore, Johnson & Johnson (NYSE:JNJ) is set to lose exclusivity for its arthritis drug Stelara in 2025, which could affect revenue since Stelara has historically generated up to $9 billion annually.
On a positive note, however, investors can be reassured by Johnson & Johnson’s strong financial position, which supports its obligations. The company had over $25 billion in cash as of the latest quarter and generated approximately $19 billion in free cash flow over the past year. Additionally, Johnson & Johnson reported $16 billion in profits on nearly $87 billion in revenue over the same period.
9. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 85
Tesla, Inc. (NASDAQ:TSLA) is the world’s largest pure-play electric vehicle manufacturer. In addition to producing EVs, the company also has a growing energy storage business and earns additional revenue by selling regulatory credits. In Q2, Tesla’s energy storage revenue doubled to reach $3 billion, which provided a boost as its EV sales faced challenges due to the high interest rate environment.
In response to a viewer’s question about Tesla Inc. (NASDAQ:TSLA) Jim Cramer emphasized his long-term belief in the stock’s strength, pointing out that Elon Musk’s leadership has redefined Tesla Inc. (NASDAQ:TSLA) as a technology company rather than just a car manufacturer.
Tesla’s Q2 2024 earnings report reveals strong performance, with revenue reaching $26.1 billion, up 22% from the previous year, and net income increasing by 17% to $2.8 billion. This growth underscores Tesla’s ability to scale operations and maintain profitability despite market challenges. The company leads in electric vehicle innovation with the new 4680 battery cell, which enhances vehicle range and reduces costs, and its advanced Full Self-Driving (FSD) technology solidifies Tesla’s position in autonomous driving.
Tesla’s global expansion is also noteworthy, with new Gigafactories in Berlin and Shanghai, the latter expected to produce 500,000 vehicles annually. Strategic partnerships, such as those with Panasonic, boost Tesla’s production and research capabilities. As the world shifts towards sustainable energy and electric vehicles, fueled by supportive regulations and growing consumer demand, Tesla is well-positioned to take advantage of these trends. Overall, Tesla’s robust financial performance, cutting-edge technology, and strategic growth initiatives suggest a promising future and continued market leadership.
8. Berkshire Hathaway Inc. (NYSE:BRK-B)
Number of Hedge Fund Holders: 120
Berkshire Hathaway Inc. (NYSE:BRK-B), led by Warren Buffett, is the largest investment holding company globally. While renowned for its adept stock picking, the majority of its revenue—$26 billion of $93 billion in the second quarter—comes from its insurance operations. Beyond insurance, Berkshire Hathaway is highly diversified, with substantial interests in renewable energy, railroads, fuel marketing, energy, industrial and construction manufacturing, and aviation services.
Berkshire Hathaway Inc. (NYSE:BRK-B) has joined the exclusive group of trillion-dollar companies, surpassing a $1 trillion market cap during Wednesday’s trading and closing above that threshold. Notably, Berkshire is the only U.S. company to achieve this milestone without being a technology firm. Instead, it reached this valuation through a portfolio of businesses often considered “boring” by investors.
With the stock now about 40% above its 52-week low and up approximately 135% over the past five years, some may wonder if Berkshire Hathaway Inc. (NYSE:BRK-B) is becoming too expensive.
Berkshire Hathaway holds $277 billion in cash and equivalents, providing it with significant financial flexibility and generating substantial interest income. Excluding this cash from its market value reduces it to $723 billion. Additionally, Berkshire’s stock portfolio is valued at around $318 billion. Removing this value shows that the market is valuing Berkshire’s core operating businesses at $405 billion.
Over the past four quarters, Berkshire Hathaway’s subsidiaries have generated $42.1 billion in operating earnings. When excluding the value of Berkshire’s stock portfolio and cash, the company’s core businesses are trading at roughly 9.5 times their trailing-12-month earnings. Even after removing investment income, Berkshire still reported $30.9 billion in profit, resulting in a price-to-earnings ratio of about 13. This valuation applies to a diverse set of recession-resistant businesses that have seen a 26% increase in operating earnings year-to-date in 2024.
7. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders: 163
Visa Inc. (NYSE:V), a leading global payment processor, dominates the market alongside Mastercard, benefiting from significant economies of scale through partnerships with banks that issue credit and debit cards on its network. While Visa focuses on customer retention and cost control rather than rapid growth, it must continuously innovate to stay ahead of competitors and new entrants.
Visa Inc. (NYSE:V) operates by routing payments and charging merchants a fee for each transaction, sharing part of this fee with card issuers and retaining the rest as revenue. This model benefits from the increasing shift away from cash transactions, bolstered by Visa’s established scale and strong brand. The payment processing market, valued at $61.1 billion in 2023, is projected to grow at a 10.5% annual rate through 2032.
In 2024, Visa Inc. (NYSE:V)faces a pivotal moment as it negotiates a historic $30 billion settlement with merchants over card fees. This deal is crucial, and Visa’s stock may experience volatility if there are delays or increases in the settlement amount. Additionally, Visa could face challenges if retailers shift to cheaper and less secure payment options, particularly given the 30-day fraud liability protection that Visa and Mastercard offer their customers.
On July 24, Jefferies reduced Visa’s price target to $300 from $325 but maintained a Buy rating. The adjustment followed a rare revenue miss and slower trends in July, alongside issues like cross-border transaction delays and ongoing merchant litigation. Despite these short-term challenges, Jefferies views Visa’s current valuation as an attractive entry point, emphasizing the company’s robust position in payment processing and its resilience amid market fluctuations.
6. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
Concerns have emerged regarding a potential delay in NVIDIA’s product shipments due to a minor design issue, which could shift expected volumes from Q4 to Q1. To counter this, NVIDIA Corporation (NASDAQ:NVDA) is increasing production of its existing “Hopper” architecture to manage the impact. Despite these issues, demand for NVIDIA’s AI chips remains robust, with the company anticipated to continue its growth trajectory.
Arya believes that potential delays in NVIDIA’s new Blackwell chip will be minor and not significantly impact overall demand, as NVIDIA’s existing Hopper products continue to be in high demand. The company’s impressive financial performance includes a revenue of $30 billion, a 15% sequential increase and 122% year-over-year rise, surpassing expectations. The data center segment generated a record $26.3 billion, driven by demand for NVIDIA Corporation (NASDAQ:NVDA)’s Hopper architecture and GPU computing.
Analyst Vivant Arya highlights that, despite market volatility affecting semiconductor stocks, NVIDIA’s strong fundamentals are intact. Major customers like Amazon, Meta, Microsoft, and Google are increasing AI investments, suggesting continued demand for NVIDIA’s products. Additionally, Taiwan Semiconductor, a key supplier, has issued a positive outlook, and partner Supermicro expects 90% sales growth next year.
Looking ahead, NVIDIA Corporation (NASDAQ:NVDA) expects Q3 revenue of $32.5 billion, bolstered by ongoing growth in its data center business and Blackwell production. The company remains well-positioned to maintain strong margins and advance its next-generation products.
5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) delivered a strong third-quarter performance, despite weaker-than-expected sales in China. While the company’s China sales declined by 6.5% year-over-year, the overall results exceeded Wall Street expectations. According to Toni Sacconaghi, the quarter was “clean,” with Apple Inc. (NASDAQ:AAPL) slightly surpassing estimates and providing modestly optimistic guidance for the upcoming quarter.
Dan Ives, Managing Director of Equity Research, Wedbush Securities maintains a bullish stance, describing the company’s performance as “good enough for now.” With the iPhone 16 cycle yet to begin, Ives sees strong potential, especially as Apple’s services sector remains robust and China begins to turn into a tailwind for the company. He rates Apple’s position as highly favorable, predicting the stock will continue to perform well, particularly as the company enters what he terms an AI-driven super cycle with the upcoming iPhone 16.
Recently, Ben, Head of Technology Research, provided insights into Apple’s future. Despite Buffett’s sales, he remains optimistic about Apple Inc. (NASDAQ:AAPL), citing a “generational upgrade cycle” as a key driver. Ben highlighted that Apple’s user base is aging, creating significant potential for new upgrades, especially with the integration of Apple Intelligence, which is exclusive to newer models.
Concerns exist about whether Apple Intelligence will substantially impact the upgrade cycle, particularly if its benefits are limited to higher-end phones. However, Ben projects that Apple’s earnings could exceed $9 per share in a bull case scenario, potentially approaching $10. Historical data shows that iPhone growth can surpass 20%, and while current expectations are modest—mid-single digits for iPhone sales this year and next—Ben believes these are achievable. He anticipates a gradual but positive upgrade cycle peaking around 2026, which should be an improvement over recent stagnation.
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 216
In a recent legal development, a judge ruled that Google violated antitrust laws by abusing its monopoly in the market, particularly through an exclusive deal with Apple. However, some argue that this ruling is outdated and fails to consider the rapidly evolving landscape of AI in search technology.
The possibility of a Alphabet Inc. (NASDAQ:GOOGL) breakup has sparked discussions about its impact on the company’s stock and overall structure. Gene Munster, a tech analyst, believes that if an announcement were made about breaking up Google, the stock could potentially rise by 5% or more, unlocking up to 20% of its value. However, he also estimates the likelihood of such a breakup at around 15%.
Dan Ives, Managing Director of Equity Research at Wedbush Securities suggests that the current antitrust challenges will likely result in business model adjustments rather than full-scale breakups. While these issues are more than just minor inconveniences, they are not expected to significantly disrupt the core operations or profitability of these tech giants. Interestingly, Ives notes that if companies like Amazon, Apple, and Google were to be broken up, the sum of their individual parts might actually be worth more than their current stock prices—a paradox in the ongoing antitrust debate.
Alphabet Inc. (NASDAQ:GOOGL) experienced significant growth in Q2 2024, with a 15% year-over-year revenue increase and a 31% rise in diluted EPS. The Google Cloud Platform (GCP) grew nearly 29% YoY, strengthening its position in the cloud market. Despite a recent 14% drop in its stock price, Alphabet Inc. (NASDAQ:GOOGL) is valued at 20-25x FY2024 earnings, indicating a potential buying opportunity. Analysts have set a price target of $203.74, projecting a 25.03% upside as of August 16. Although regulatory challenges and AI competition pose risks, Alphabet’s strong data capabilities and innovation provide resilience.
3. Meta Platforms Inc (NASDAQ:META)
Number of Hedge Fund Holders: 219
Meta Platforms Inc. (NASDAQ: META) recently exceeded analyst expectations in its latest quarterly earnings, signaling that its significant investment in AI is beginning to pay off and could lead to even more positive outcomes in the future. In response, Citi expressed an “incrementally positive” outlook on Meta’s shares, citing improved user engagement, monetization, and expanding profit margins. As a result, Citi raised its price target for META from $550 to $580.
JPMorgan also highlighted the benefits of AI for Meta Platforms Inc. (NASDAQ: META) at three key levels: enhancements to its core Family of Apps (FoA), new opportunities and user experiences, and the scaling of the Metaverse. Consequently, JPMorgan raised its price target for META from $480 to $610. Additionally, Morgan Stanley praised Meta’s advancements in its recommendation systems and overall quality through AI improvements.
While the market has been cautious about Meta’s substantial AI spending, the company aims to leverage AI to enhance user interactions, improve engagement, and better monetize its vast user base of 3.2 billion daily active users. With a robust free cash flow margin of around 30%, Meta Platforms Inc. (NASDAQ: META) is on track to generate $50 billion in free cash flow this year, which would place the stock at approximately 26 times this year’s free cash flow. If this growth continues, Meta could achieve $58 billion in free cash flow by next year, reducing the stock’s valuation to 21 times next year’s free cash flow.
With a strong financial position, including $35 billion in net cash, a massive user base, and a leading role in the AI-driven consumer market, Meta Platforms Inc. (NASDAQ: META) is positioned as a solid long-term investment opportunity.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft’s recent cloud growth, particularly in its Azure service, fell short of expectations, leading to some disappointment among investors. While the company has been a leader in AI-driven growth over the past year, this quarter’s results showed a deceleration, raising concerns about whether the momentum gained from AI is starting to wane. This deceleration in cloud revenue, coupled with a significant increase in capital expenditures (CapEx), has led to uncertainty about Microsoft’s future growth trajectory.
Despite these concerns, some investors see any potential dip in Microsoft’s stock as a buying opportunity. With its position as a key player in the tech sector, Microsoft Corporation (NASDAQ:MSFT) remains a strong contender in the market. Investors are also looking for signs in the upcoming earnings report that could serve as catalysts for future growth, particularly in relation to AI-driven profits and overall demand for Microsoft’s AI tools.
Gil Luria, a software analyst at D.A. Davidson believes that the guidance provided by Microsoft in its upcoming call is expected to be crucial, as it will reveal whether the company plans to continue increasing its CapEx despite the slower revenue growth. Investors are beginning to adjust their expectations around AI’s contribution to Microsoft’s business, acknowledging that while the company’s AI advancements are impressive, the growth may not be as rapid as previously anticipated.
Brent Thill, Jefferies analyst emphasized that while Microsoft Corporation (NASDAQ:MSFT) missed its growth targets, the miss was small, and the company remains well ahead of its competitors in AI. He pointed out that the weakness was largely due to softer demand in Europe and a dip in transactional business during the quarter. Even so, Microsoft’s performance, particularly in AI, continues to outpace expectations, and Thill expects the company to regain momentum in the latter half of the year. Thill continues to rate Microsoft Corporation (NASDAQ:MSFT) as a top pick, maintaining a price target of $550.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 308
Amazon’s stock recently plummeted following its disappointing third-quarter revenue guidance, prompting a significant market reaction. Despite this, Goldman Sachs tech analyst Sheridan has maintained a positive outlook on the company, even lowering his price target from $250 to $230. Sheridan argues that Amazon Web Services (AWS) is reaccelerating, largely driven by increased enterprise-level workload migration and growing AI workloads. He believes that AWS remains an undervalued asset within Amazon.com, Inc. (NASDAQ:AMZN), especially considering its 19% growth rate and mid-30s GAAP operating income margin.
Investors fear that Amazon.com, Inc. (NASDAQ:AMZN) potentially overbuilding its cloud infrastructure may outpace demand. However, Amazon.com, Inc. (NASDAQ:AMZN) has a long-term growth potential, particularly as operating margins are expected to return to pre-pandemic levels. The current stock price, around $170, is relatively cheap given the anticipated earnings growth in the coming years.
Scott Devitt from Wedbush on CNBC, highlighted a $1 billion currency headwind that impacted the top line. While AWS exceeded expectations with a 19% growth rate, the company’s advertising revenue underperformed, coming in at 19.5%, below the consensus of 22%. This underperformance contrasts with strong advertising results from other tech giants like Meta.
While the disappointing advertising revenue is concerning, AWS’s strong performance is a positive sign for Amazon’s long-term growth. The stock’s decline could be considered as a potential buying opportunity, especially given the strength in AWS. Analysts remain optimistic about the company’s long-term prospects, particularly in the cloud and AI sectors. Investors are encouraged to focus on the bigger picture of sustained growth, rather than short-term fluctuations.
While we acknowledge the potential of AMZN to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than the stocks mentioned on our list but that trades at less than 5 times its earnings, heck out our report about the cheapest AI stock.
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