In this article, we discuss the 4 tech stocks that hedge funds prefer over Netflix. If you want to read about some more tech stocks that hedge funds like, go directly to Hedge Funds Prefer These 9 Tech Stocks Over Netflix.
4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 209
The ticker, Alphabet Inc. (NASDAQ:GOOGL), represents the Class A shares of tech firm Alphabet. As the net income of the firm increases, there are indications that it could follow the path of competitor Apple and splurge on share buybacks to boost the EPS. Apple has spent close to half a trillion dollars on share buybacks in the past few years. With services like YouTube and Google Cloud generating a significant amount of revenue for the firm, it seems like Google does not need to invest a whole lot more into services, unlike consumer giant Apple.
In the next few years, Google Cloud, which generated $22 billion in revenue for Alphabet Inc. (NASDAQ:GOOGL) in the past quarter, could jump to around $100 billion annual revenue by 2025. Incentive to spend on share buybacks is increased considering that most of the cash produced by Google is held in securities with percent returns.
At the end of the fourth quarter of 2021, 209 hedge funds in the database of Insider Monkey held stakes worth $32.3 billion in Alphabet Inc. (NASDAQ:GOOGL), up from 195 in the preceding quarter worth $28.5 billion.
3. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 224
Meta Platforms, Inc. (NASDAQ:FB) is a diversified technology company. On March 24, the company announced that it would invest close to $800 million to build a new hyperscale data center in Kansas. The facility, comprising 1 million square feet, will be the 16th Meta data center in the US and the 21st around the world. The new facility will also pursue a new sustainability initiative of the firm under which the center will have at least 80% more water efficiency while using 32% less energy.
On March 10, Deutsche Bank analyst Benjamin Black initiated coverage of Meta Platforms, Inc. (NASDAQ:FB) stock with a Buy rating and a price target of $265, noting that ESG concerns around the firm were manageable and had created an “unprecedented” favorable risk/reward profile for the stock.
At the end of the fourth quarter of 2021, 224 hedge funds in the database of Insider Monkey held stakes worth $31.8 billion in Meta Platforms, Inc. (NASDAQ:FB), compared to 248 in the preceding quarter worth $38.5 billion.
In its Q4 2021 investor letter, Boyar Value Group, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:FB) was one of them. Here is what the fund said:
“Corporate executives can have many different reasons for selling shares (anticipation of tax law changes, philanthropy, diversification, and much more), but the sheer number of billionaire founders who sold shares in 2021 should raise eyebrows and might well be signaling a market top. Bloomberg’s Ben Steverman and Scott Carpenter report not only that Mark Zuckerberg of Meta Platforms, Inc. (NASDAQ:FB) (formerly known as Facebook) sold shares in his company almost every day last year but also that the founders of Google sold ~$3.5 billion worth of stock (the first time either Sergey Brin or Larry Page has sold shares since 2017).”
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 262
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based tech giant. The company has multiple drivers of growth in the coming years, including the Azure web services business, the Office subscription software business, and the gaming business. The firm is also famous for successful acquisitions. As the $75 billion deal to acquire Activision matures, it is worth considering that the revenue of LinkedIn, another blockbuster Microsoft purchase from a few years ago, has seen revenue triple since the takeover.
On February 8, Morgan Stanley analyst Keith Weiss maintained an Overweight rating on Microsoft Corporation (NASDAQ:MSFT) stock with a price target of $372, identifying the firm as a “durable EPS growth story” and a “strong buy”.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ:MSFT) with 26.8 million shares worth more than $9 billion.
In its Q4 2021 investor letter, Vulcan Value Partners, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:
“Microsoft Corporation (NASDAQ:MSFT) was a material contributor during the quarter. It is one of the highest quality companies in the world. We believe it has tremendous competitive advantages in its consumer and commercial Microsoft Office products as well as in its server and tools and Azure divisions. Over the last several years, Microsoft Corporation (NASDAQ:MSFT) has been implementing a successful transition from a traditional software license and maintenance revenue model to a subscription revenue model. The company remains competitively entrenched, produces strong free cash flow, and has a strong balance sheet.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 279
Amazon.com, Inc. (NASDAQ:AMZN) is a technology firm with core interests in the ecommerce business. Amazon invested nearly $11 billion into the streaming content for Amazon Prime Video in 2020 and $13 billion in 2021, complementing the subscription growth story with a nearly trillion dollar valuation. The subscription growth of Amazon Prime Video is higher than the revenue growth of Netflix. The service is on track to rake in revenue of nearly $100 billion by 2025.
On March 25, Evercore ISI analyst Mark Mahaney kept an Outperform rating on Amazon.com, Inc. (NASDAQ:AMZN) stock with a price target of $4,300, noting that shipping elasticity, brand advertising revenue, grocery, and the cheap share price were underappreciated growth catalysts for the stock.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. (NASDAQ:AMZN) with 4.1 million shares worth more than $13.9 billion.
In its Q4 2021 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ:AMZN) was one of them. Here is what the fund said:
“Within the traditional growth category, growing euphoria has led to bubble prices for many companies, most especially those with new and unproven business models such as those discussed above. In contrast, our research focuses on a select handful of proven growth stalwarts whose shares still trade at reasonable valuations. For example, because of concerns about future litigation and regulation, several dominant internet businesses, including Amazon.com, Inc. (NASDAQ:AMZN), trade at steep discounts to many unproven and unprofitable growth darlings that, in our view, trade at euphoric prices. While we expect a continued barrage of negative headlines around the company, as well as increased regulation in the years ahead, we do not expect a significant decline in its long-term profitability.”
You can also take a peek at 10 Best Healthcare Dividend Stocks to Buy Now and 10 Dividend Stocks with Over 20 Years of Dividend Increases.
