Below we take a look at why Jim Cramer and Billionaire Ken Fisher Love These 5 Stocks. For our methodology and a more comprehensive list please see Jim Cramer and Billionaire Ken Fisher Love These 10 Stocks.
5. NVIDIA Corporation (NASDAQ:NVDA)
Value of Fisher Asset Management’s 13F Position: $3.46 billion
Number of Hedge Fund Shareholders: 178
NVIDIA Corporation (NASDAQ:NVDA) ranks fifth on the this list as the 6th largest holding in Ken Fisher’s 13F portfolio in addition to being a stock that Jim Cramer really likes. Fisher has owned Nvidia since the final quarter of 2017, during which time the shares have skyrocketed by about 900%, putting them in ten bagger territory. Hedge funds as a whole are going crazy for Nvidia right now, as smart money ownership of the stock has doubled just in the last three quarters.
Jim Cramer’s Charitable Trust portfolio has owned NVIDIA Corporation (NASDAQ:NVDA) for a long time and the CNBC analyst and former hedge fund manager still likes the stock, though he cautioned viewers in August that he’s not necessarily saying to buy the stock at current (at the time) prices, given their rapid rise this year. Nonetheless, he’s extremely bullish on the company’s opportunity in AI, calling their new chip a “super-super brain”.
Saltlight Capital noted that NVIDIA Corporation (NASDAQ:NVDA) may have lost one of its competitive advantages in the fund’s second quarter 2023 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) has become the de-facto AI name in the market (rightly so) and has delivered a remarkable performance for us. We have been gradually trimming our investment to, what we call, an ‘optionality’ size position as the stock price has dramatically gone up. Conditions are chalk and cheese to when we first purchased our investment.
Recent news makes us think twice: PyTorch 2.0, the machine learning framework recently announced support for AMD GPUs which is a negative for NVIDIA.
For many readers, this may be getting into the weeds but in our May 2021 letter, we discussed one aspect of NVIDIA’s competitive edge – its proprietary CUDA software. Operating as the interface between their GPUs and machine learning (ML) libraries, CUDA has become the standard layer in the AI stack to enable parallelised processing, a critical function for complex neural network models. Competing, cheaper, GPUs with inferior working libraries struggled to gain meaningful traction because the early versions of machine learning libraries (PyTorch and TensorFlow) did not directly interface with them. This created friction for developers and effectively blocked cheaper competitor GPUs from handling machine learning workloads….” (Click here to read the full text)
4. Alphabet Inc. (NASDAQ:GOOG)
Value of Fisher Asset Management’s 13F Position: $5.11 billion (GOOGL)
Number of Hedge Fund Shareholders: 204 (GOOGL), 152 (GOOG)
The final four stocks on this list are also the top four holdings in Ken Fisher’s 13F portfolio as of June 30, beginning with Alphabet Inc. (NASDAQ:GOOG). Fisher’s been long the search engine behemoth since Q4 2007 and hundreds of other leading funds continue to hold on tightly to their GOOG or GOOGL shares. The company ranks as the most popular stock among hedge funds when factoring in the ownership of both classes of shares, and that smart money ownership has remained extremely steady for several quarters.
Given the regulatory uncertainty surrounding the company, Jim Cramer sounded a cautious note on Alphabet Inc. (NASDAQ:GOOG) back in July, suggesting investors trim their positions if the stock rose following the company’s late-July quarterly earnings report, which it did. Nonetheless, he declared it a buy just a few weeks later in August, saying the stock hadn’t really run up all that much despite the company’s “monster good” quarter.
The Wedgewood Partners Large Cap Focused Growth Fund believes Alphabet Inc. (NASDAQ:GOOG)’s AI prowess will boost the appeal of its platforms for both users and advertisers, as detailed in the fund’s second quarter 2023 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) was also a top contributor to performance as revenues returned to year-over-year growth after a brief period of post-pandemic advertising spending digestion. The Company’s Cloud division also turned a small profit on a roughly $30 billion revenue run-rate. The Company’s internal engineering prowess should continue to drive longer hardware useful life and better profitability for this unit over time. Alphabet and its Google subsidiary have been pioneers in AI development, creating some of the most important software and hardware specifications and standards that developers rely on today. Alphabet should be able to continue to capitalize on its long-term AI investments by rolling out product improvements for users and advertisers featuring more automation that can deliver better returns.”
3. Amazon.com, Inc. (NASDAQ:AMZN)
Value of Fisher Asset Management’s 13F Position: $5.30 billion
Number of Hedge Fund Shareholders: 283
Ken Fisher has been a happy shareholder of Amazon.com, Inc. (NASDAQ:AMZN) dating back to the first quarter of 2011, enjoying greater than 1,300% returns on his position during that time. Hedge funds were selling out of Amazon in droves during the final quarter of last year, but that decline rebounded in the second quarter of this year, as dozens of funds added the stock to their portfolios.
Cramer noted near the end of last year that his Charitable Trust had begun building a small stake in Amazon.com, Inc. (NASDAQ:AMZN) again after previously selling out of its former AMZN position at a much higher price. In April of this year, Cramer noted that if Amazon lays off even more of its workforce it could have a hugely beneficial effect on the company’s stock, declaring it the most dangerous short on the market today. In May, he added that Amazon is being underplayed in the AI space, noting that its machine learning capabilities are being used by various major companies in the areas of image recognition and intelligent speech, among other areas.
Baron Fifth Avenue Growth Fund is bullish on the near-term profitability of Amazon.com, Inc. (NASDAQ:AMZN)’s North American retail segment, as discussed in its second quarter 2023 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest retailer and cloud services provider. During the quarter, Amazon’s shares increased 26.2% as a result of improving investor perception regarding the company’s advancements in AI, as well as an anticipated slowdown in customer cloud optimization initiatives, which is expected to pave the way for the reacceleration of growth in Amazon Web Services in the latter part of 2023. We are also optimistic about Amazon’s ability to significantly enhance the profitability of its core North American retail segment in the short to medium term. This optimism stems from the company’s transition to a new regionalized fulfillment network, the rightsizing of its infrastructure from the increased spending levels during the early stages of the pandemic, and its rapidly growing advertising business, which is margin accretive. Looking further ahead, Amazon’s potential for growth in e-commerce remains substantial, considering it currently captures less than 15% of its total addressable market. Amazon also remains the clear leader in the vast and growing cloud infrastructure market, with large opportunities in application software, including enabling GenAI workloads.”
2. Microsoft Corporation (NASDAQ:MSFT)
Value of Fisher Asset Management’s 13F Position: $8.32 billion
Number of Hedge Fund Shareholders: 309
Coming in at second place is Microsoft Corporation (NASDAQ:MSFT), with Ken Fisher holding an $8.32 billion stake in the company, more than $3 billion greater than the value of his third-ranked Amazon holding. Fisher has been a shareholder of the tech giant for more than two decades. Hedge fund ownership of Microsoft climbed even higher in the second quarter to reach another all-time high and ranks as the most popular ticker among hedge funds.
Microsoft is a stock that Jim Cramer swore his Charitable Trust would never sell, yet it did sell some MSFT shares in January, partly on Cramer’s fears that Microsoft’s layoffs were the harbinger of a weak forthcoming earnings report. He noted it wasn’t a stock to “hunker down in” and wait out a potential storm given its high P/E.
However, Cramer has also been extremely bullish on Microsoft Corporation (NASDAQ:MSFT)’s AI endeavors, calling the company a “winner” during a Lightning Round segment in June and praising the implementation of AI across many of the company’s brands. He also noted in June that Morgan Stanley’s Keith Weiss issued a glowing report along with a massive target price raise to $415 on the stock, with Weiss declaring Microsoft the generative AI leader.
Dan Loeb’s Third Point Management recently raised its stake in several cloud software companies, including Microsoft Corporation (NASDAQ:MSFT), as revealed in its second quarter 2023 investor letter:
“While our gross equity exposure is still modest (below 100% on the long side), we have increased our nets to 70% as of this writing and 77% on a beta adjusted basis. About 45% of that net long exposure is composed of direct and indirect AI beneficiaries trading at reasonable valuations. We have sized up our investments in certain cloud software businesses including Microsoft Corporation (NASDAQ:MSFT), a clear AI winner as a result of its rapidly growing Azure cloud business, upside from applying AI features to its core Office products, investment in Open AI, and ability to provide AI services to other companies (for example, Microsoft holds a stake in one of our portfolio companies, LSE, which it is also assisting in harnessing greater value in its data via AI).”
1. Apple Inc. (NASDAQ:AAPL)
Value of Fisher Asset Management’s 13F Position: $10.2 billion
Number of Hedge Fund Shareholders: 138
Topping the list of stocks that Ken Fisher and Jim Cramer both love is Apple Inc. (NASDAQ:AAPL), which has been Fisher’s top stock pick for nearly four years. He’s held the position since the fourth quarter of 2005, during which time it’s gained over 7,000%. While Apple does rank as one of the most popular stocks among hedge funds, it widely trails several other tech giants, including Microsoft and Alphabet.
In July, Jim Cramer said that Apple Inc. (NASDAQ:AAPL) is crushing it thanks to having the best subscription service model in the world. He then told viewers in early August to “Own Apple. Don’t trade it” in light of the company’s “incredible numbers” (including $81.8 billion in fiscal Q3 revenue). He’s also bullish on Apple’s manufacturing expansion into India, where it now makes about 7% of its phones, up from just 1% in 2021, saying in April that he was very excited about that development given that it helps insulate the company from the uncertainty and political tension surrounding China.
Choice Equities Capital Management put Apple Inc. (NASDAQ:AAPL)’s staggering $3 trillion market cap in context in its second quarter 2023 investor letter:
“Dramatic valuation differences across market cap sizes continue. This has been the case for some time now. Perhaps I have spent too much time discussing these dichotomies, as generally, I feel like if we pick the right stocks and manage market exposures thoughtfully, our equities- oriented portfolio will prosper across various market cycles. However, when markets become as lopsided as they have lately, I feel additional discussion on the market environment is worthwhile, if only to help highlight the opportunities that are available and the likely path forward. I expect future discussions to soon be focused again on our moderately concentrated portfolio. But for now, let’s take one last in-depth look at how far reaching these valuation dichotomies have again become.(Please note: charts that accompany the following can be found in the Appendix.)
Take Apple Inc. (NASDAQ:AAPL) for example. It is the largest stock by market cap, and fairly considered one of the best companies in the world. The company has been extraordinarily successful and improved standards of living everywhere in the process with their ubiquitous products. Along the way, shareholders have been richly rewarded, with shares increasing nearly fourteen-fold over the last ten years while generating an annualized total shareholder return of 31%, including dividends.
On the back of another big quarter for large cap tech, it is now the first stock to surpass the $3T market cap threshold. This makes its weighting in the ~$37T market cap of the S&P 500, ~8%. It also means this one stock’s market cap is larger than that of the entire ~$2.98T market cap of the Russell 2000 index, the first time in history a single stock has outweighed the Russell 2000 – aside from two brief days in September 2020 when Apple’s market cap then accomplished the same…” (Click here to read the full text)
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Disclosure: None.
