We recently published a list of 10 Good Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Meta Platforms, Inc. (NASDAQ:META) stands against other good stocks to buy according to hedge funds.

When seeking investment opportunities, individual investors often look to hedge funds for guidance. Hedge funds are known for their sophisticated investment strategies, high-level expertise, and significant market influence. Hedge funds are massive players in the global investment landscape, managing trillions of dollars in assets. According to Preqin, as of Q3 2024, hedge funds manage approximately $4.87 trillion in assets globally. This significant amount of capital means that hedge funds have substantial market power. When they invest in certain stocks, their actions can impact stock prices, drive market trends, and influence broader economic sentiment. As such, their decisions are followed closely by institutional and retail investors alike.

A key reason hedge fund stock picks are worth paying attention to is their wide diversification across various sectors and strategies. Multi-strategy hedge funds, which allocate capital across various investment strategies, have gained prominence. According to WealthBriefing from 2017 to the third quarter of 2024, the number of multi-strategy fund launches grew at an annual rate of 4%.

Hedge Funds’ Dual Investment Strategy (Long and Short Positions)

Hedge funds are also known for using a dual approach—investing in both long and short positions. This allows them to profit from rising and falling markets, giving them a comprehensive view of market dynamics. According to data from BarclayHedge, hedge funds that employed a long/short strategy in 2024 saw returns of around 9%.

​Hedge funds have increasingly focused on artificial intelligence (AI) and technology sectors, adjusting their portfolios to capitalize on emerging opportunities. According to a Goldman Sachs report analyzing 695 hedge funds with $3.1 trillion in gross equity positions at the start of Q1 2025, there has been a notable shift in investment strategies. The report indicates that hedge funds have become more selective within popular sectors and themes. Notably, they have incrementally added positions to AI Phase 3 companies with AI-enabled revenues. Companies like Salesforce are ranked among the “Rising Stars,” reflecting a significant increase in hedge fund popularity during the last quarter. ​

Our Methodology

We used a consensus-based approach by using opinions from financial websites like Forbes Advisor, Motley Fool, and Morningstar to first compile a list of good stocks to invest in right now. We then shortlisted and ranked these stocks by using Insider Monkey’s hedge fund data for the fourth quarter of 2024. The stocks are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest number.

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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Meta Platforms, Inc. (NASDAQ:META)

No of Hedge Fund Holders: 262

Meta Platforms, Inc. (NASDAQ:META) is focused on connecting people and enabling digital communities through social media, virtual reality (VR), and mixed reality (MR) experiences. It operates through two main segments: Family of Apps (FoA), which includes Facebook, Instagram, Messenger, Threads, and WhatsApp, and Reality Labs (RL), which develops VR and MR hardware, software, and content.

Meta Platforms (NASDAQ:META) is doubling down on AI infrastructure. The company aims to secure $35 billion in financing, led by Apollo Global Management, to expand U.S. data centers and meet the rising computational demands of artificial intelligence. In a strategic push toward AI monetization, the company also announced plans to launch a paid subscription service for its AI chatbot in Q2 2025, positioning itself to compete with advanced AI offerings in the market.

Meta Platforms (NASDAQ:META) posted strong full-year 2024 results, with revenue rising 22% YoY to $164.5 billion. This was driven by a 10% increase in the average ad price and 11% growth in ad impressions across its platforms. Total expenses grew 8% YoY to $95.1 billion, while free cash flow surged to $52.1 billion, reinforcing the company’s financial strength. Capital expenditures reached $39.2 billion, reflecting continued investments in AI and data infrastructure.

On February 11, 2025, Ivan Feinseth of Tigress Financial maintained his “Strong Buy” rating on the stock while raising the price target from $645 to $935.

Overall, META ranks 3rd on our list of good stocks to buy according to hedge funds. While we acknowledge the potential for META as an investment, 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 META but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article is originally published at Insider Monkey.