In this article, we will discuss the Long-Term Stock Portfolio: 15 Best Stocks for 15 Years
Russell Investments believes that 3 features are defining the market outlook for 2025. These include the elevated level of the S&P 500 forward P/E ratio, the potential for further US dollar strength, as well as the direction of the US 10-year Treasury yield. The active equity managers have been challenged by the severe market concentration. The firm opines that a flattening out of such trends— which can be seen due to policy shifts or change in sentiments related to earnings growth and valuations for mega caps — can support active manager outperformance.
Russell Investments remains focused on sectors in which AI adoption has been ramping up, including industrials, healthcare, and consumer goods. As per the firm, companies that leverage AI for productivity improvements remain well-placed to gain a lasting competitive edge and provide healthy returns. Therefore, skilled active managers are required to look for such companies, primarily those that are in less-covered segments of the market.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Sectors Providing Investment Opportunities
With respect to real assets, Russell Investments sees attractive investment opportunities in real estate and infrastructure, mainly sectors that can benefit from the stabilization of long-term interest rates and favorable relative valuations in comparison to other growth assets. The application of AI in real estate, like data centers and healthcare facilities, continues to emerge as a critical growth area. Furthermore, the infrastructure investments continue to gain momentum from energy utilities and pipeline exposures, given the US administration’s emphasis on expanding LNG (liquified natural gas) production.
The firm also believes that an early focus on deregulation and tax cuts would likely be well-received by equity investors. Overall, an expected US soft landing, together with anticipated policy moderation on trade and immigration, creates specific opportunities for well-positioned portfolios, says Russell Investments.
With this in mind, let us now have a look at the Long-Term Stock Portfolio: 15 Best Stocks for 15 Years.
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Our Methodology
We sifted through the holdings of iShares Core S&P 500 ETF and shortlisted the companies that have 10-year revenue growth of over ~10%. Next, we selected stocks that were the most popular among elite hedge funds. We have ranked the stocks in ascending order of hedge fund sentiment.
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).
Long-Term Stock Portfolio: 15 Best Stocks for 15 Years
15. Linde plc (NASDAQ:LIN)
10-year Revenue Growth: ~10.4%
Number of Hedge Fund Holders: 70
Linde plc (NASDAQ:LIN) operates as an industrial gas company. Analyst Laurence Alexander from Jefferies maintained a “Buy” rating on the company’s stock with the price objective of $535.00. The analyst’s rating is backed by a combination of factors demonstrating a favourable outlook for Linde plc (NASDAQ:LIN)’s future performance. As per the analyst, the expected growth in sectors including electronics, food and beverage, and healthcare can fuel sales and EPS by 2025, despite worries in the cyclical markets such as metals and energy.
Furthermore, amidst uncertainties associated with trade policies and potential policy shifts, Linde plc (NASDAQ:LIN)’s emphasis on on-site volumes and productivity improvements can fuel its sales growth and protect margins, says Alexander. Elsewhere, analyst John Roberts CFA from Mizuho Securities maintained a “Buy” rating. This rating is backed by factors demonstrating the company’s stability and growth potential in a challenging economic environment. Linde plc (NASDAQ:LIN)’s performance in the industrial gases sector, which remains a reliable indicator of industrial cycles, is stable throughout both consumer and industrial-facing segments, says Roberts.
Mar Vista Investment Partners, LLC, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“Linde plc (NASDAQ:LIN) is the world’s largest, global industrial gas producer. The company enjoys the highest profit margins and returns on capital in the industry. Linde’s primary products are atmospheric gases and process gases. Industrial gases have benefitted from secular growth trends in decarbonization and carbon sequestration. Moreover, the opportunity in blue and green ammonia and hydrogen are substantial. Projects in these areas are quickly being added to its backlog for future growth. We see these secular trends as long-term positives for Linde and the entire industrial gas industry.
Linde believes it can grow its volumes with new applications; the buildout of small, on-site plants using its technologies; and focusing on growing geographies such as India, Malaysia, Vietnam, China and Brazil. Despite the long-term growth opportunities, recent demand trends have slowed due to weak global industrial production and a challenging year-over-year comparable. Among the regions, the U.S. remains resilient, with volumes flat to slightly negative. Europe, Latin America, the Middle East, and China are all sending mixed to negative economic signals. We believe these slower trends are transitory in nature, providing an opportunity to purchase shares in Linde at attractive prices.”
14. T-Mobile US, Inc. (NASDAQ:TMUS)
10-Year Revenue Growth: ~10.6%
Number of Hedge Fund Holders: 70
T-Mobile US, Inc. (NASDAQ:TMUS) offers wireless communications services. Benchmark analysts maintained a “Buy” rating on the company’s stock with the price objective of $275.00, citing confidence in its growth prospects. The firm’s analysts noted the company’s healthy position among customers switching carriers, which can support T-Mobile US, Inc. (NASDAQ:TMUS)’s continued growth in postpaid phone and overall postpaid units. Furthermore, the company’s performance in core urban markets reinforces Benchmark’s confidence.
T-Mobile US, Inc. (NASDAQ:TMUS)’s early investments in 5G technology offered it a head start in network coverage and performance. This advantage was a critical driver of subscriber growth, mainly in the postpaid phone segment. Its sustainable 5G network advantage can continue to fuel market share and industry-leading EBITDA growth. As 5G adoption increases and more applications use this technology, the company remains well-placed to capitalize on this trend. T-Mobile US, Inc. (NASDAQ:TMUS) and EQT announced the successful close of their JV to acquire fiber-to-the-home provider, Lumos. This deal exhibits a critical milestone in T-Mobile US, Inc. (NASDAQ:TMUS)’s broadband growth and builds on the Un-carrier’s success in providing best-in-class connectivity.
Lumos operates a 7,500-mile fiber network, offering high-speed connectivity to 475,000 homes throughout the Mid-Atlantic. The JV combines the Un-carrier’s unique assets with EQT’s fiber infrastructure expertise and Lumos’ scalable build capabilities in a bid to fuel rapid network expansion, with a target of reaching 3.5 million homes by 2028 end. To drive this growth, T-Mobile US, Inc. (NASDAQ:TMUS) invested $950 million into JV, with an additional $500 million aimed between 2027 and 2028.
13. AbbVie Inc. (NYSE:ABBV)
10-year Revenue Growth: ~10.9%
Number of Hedge Fund Holders: 85
AbbVie Inc. (NYSE:ABBV) is a research-based biopharmaceutical company that is engaged in the research and development, manufacture, commercialization, and sale of medicines and therapies. Erste Group upped the company’s stock from “Hold” to “Buy.” The rating stems from the company’s strong sales growth forecast and promising pipeline of new products. Notably, AbbVie Inc. (NYSE:ABBV) has reaffirmed expectations for a high single-digit compound annual revenue growth rate through 2029 and has increased its 2027 combined sales outlook for Skyrizi and Rinvoq to over $31 billion.
AbbVie Inc. (NYSE:ABBV)’s strategic emphasis on expanding the product portfolio appears to contribute to its sustained growth and profitability over the long term. Elsewhere, Bernstein SocGen Group remains optimistic about the company, citing its entry into the obesity treatment market via the Gubra agreement. This move is regarded as a strategic diversification, aligning AbbVie Inc. (NYSE:ABBV)’s long history of successful ventures outside the core focus. AbbVie Inc. (NYSE:ABBV) believes that this partnership provides a strong opportunity based on the potential to address patient needs while, at the same time, bolstering long-term growth.
Ariel Investments, an investment management company, published its Q4 2024 investor letter. Here is what the fund said:
“We added research-based biopharmaceutical company, AbbVie Inc. (NYSE:ABBV) following a recent pullback in shares related to a Phase 2 clinical failure for schizophrenia drug, Emraclidine. Despite the setback, we believe AbbVie’s core inflammation and immunology (I&I) business is set to outperform. We expect next-generation I&I drugs, Skyrizi and Rinvoq, used in the treatment of inflammatory bowel disease, to be key long-term revenue drivers.”
12. The Charles Schwab Corporation (NYSE:SCHW)
10-Year Revenue Growth: ~12.6%
Number of Hedge Fund Holders: 91
The Charles Schwab Corporation (NYSE:SCHW) operates in brokerage, banking, and asset-management businesses. Morgan Stanley analysts upped the company’s stock from “Equal-weight” to “Overweight.” The revision demonstrates a favorable outlook on its unique earnings recovery potential and the perceived value of the brokerage as a high-quality franchise amidst economic uncertainty. Furthermore, the upgrade was aided by the belief that The Charles Schwab Corporation (NYSE:SCHW) possesses defensive characteristics, making it suitable to the current economic environment.
The analysts at Morgan Stanley believe that the impact of tariffs on inflation can prevent the US Fed from cutting rates too soon or too sharply. This scenario is anticipated to favour The Charles Schwab Corporation (NYSE:SCHW). In a less certain economic landscape, customer sweep cash balances can witness an increase, providing additional support to earnings. Elsewhere, Jefferies analyst Daniel Fannon maintained a “Buy” rating on The Charles Schwab Corporation (NYSE:SCHW)’s stock with the price objective of $89.00. The improvement in macroeconomic conditions can benefit the company moving forward. As and when economic growth strengthens, it can lead to increased investor confidence and elevated trading volumes.
Nightview Capital, an investment management company that concentrates exclusively on publicly traded equity strategies, published its Q4 2024 investor letter. Here is what the fund said:
“Finance is transforming. Technology is democratizing access, reshaping wealth management, and enabling entirely new models of investing. From algorithmic trading to digital-first advisory platforms, the sector is evolving rapidly. Investors demand smarter, more sustainable options. The potential is significant, and we are focused on companies shaping how people save, invest, and transact in the years to come.
The Charles Schwab Corporation (NYSE:SCHW): Core Opportunity: Schwab is rebounding after a challenging period, supported by leadership stability, operational improvements, and client retention gains.
Key Highlights: Leadership Transition: Incoming CEO Rick Wurster continues the strategic vision of Schwab’s founder and most recent CEO…” (Click here to read the full text)
11. S&P Global Inc. (NYSE:SPGI)
10-Year Revenue Growth: ~10.9%
Number of Hedge Fund Holders: 99
S&P Global Inc. (NYSE:SPGI) offers data and benchmarks to capital and commodity market participants. Morgan Stanley analyst Toni Kaplan has maintained the bullish stance on the company’s stock, providing a “Buy” rating on April 4. The analyst’s rating is backed by factors highlighting current market conditions and future expectations for the company. Despite a softer credit issuance environment, the analyst opines that S&P Global Inc. (NYSE:SPGI)’s strategic positioning and pricing power are expected to support its growth. Its ability to maintain a positive revenue trajectory, even during the challenging macroeconomic conditions, highlights the potential for long-term value creation, says the analyst.
Overall, the decision to maintain an ‘Overweight’ rating on S&P Global Inc. (NYSE:SPGI)’s stock stems from its healthy market position as well as the expectation that it will continue to capitalize on its strengths amidst the evolving financial landscape. Elsewhere, analyst Jeffrey Silber of BMO Capital maintained a “Buy” rating on S&P Global Inc. (NYSE:SPGI)’s stock and retained a price objective of $590.00. Silber opines that the company’s diversified portfolio, aided by the merger with IHS Markit, cements its market position and reduces its dependency on debt issuance, which makes the company’s stock an attractive investment opportunity.
Montaka Global Investments, an investment management company, released Q4 2024 investor letter. Here is what the fund said:
“The broader global investing environment will also likely improve cyclically in 2025. The global monetary tightening cycle has now peaked, and we are in the early days of an easing cycle – including in the US, the Eurozone, and China (collectively representing nearly 60% of global GDP) – which will likely continue in 2025.
While there is no shortage of political upheaval around the world, in 2025 we will exit a trough of ‘political dysfunction’ in the world’s largest economy, the US (to which a majority of Montaka’s portfolio is exposed).
Political dysfunction stems from the different legislative bodies being controlled by different political parties that tend to disagree on most topics.
These collective conditions will benefit the shareholders of many businesses.
One of our major holdings, S&P Global Inc. (NYSE:SPGI), for example, which has already commenced a cyclical recovery in its Credit Ratings business, will likely see a new recovery in its Market Intelligence business as buy-side and sell-side market activity recovers…” (Click here to read the full text)
10. Booking Holdings Inc. (NASDAQ:BKNG)
10-Year Revenue Growth: ~10.8%
Number of Hedge Fund Holders: 99
Booking Holdings Inc. (NASDAQ:BKNG) offers online and traditional travel and restaurant reservations and related services. The company’s investments in AI and its Connected Trip strategy can fuel future growth by enhancing the customer experience and improving operational efficiency. AI technologies can be used to offer more personalized recommendations, enhance search algorithms, and provide dynamic pricing strategies that improve revenue. Booking Holdings Inc. (NASDAQ:BKNG)’s Connected Trip strategy focuses on providing seamless end-to-end travel experience, enhancing the customer loyalty and driving increased booking frequency.
Through integrating several travel services, Booking Holdings Inc. (NASDAQ:BKNG) can capture a significant share of the traveller’s overall spend and reduce the probability of customers utilising several platforms for various aspects of the trip. Furthermore, AI-driven efficiencies in customer service and backend operations can help in reducing costs and improving margins. As Booking Holdings Inc. (NASDAQ:BKNG) refines its AI capabilities and enhances its Connected Trip offerings, it can establish a significant competitive advantage.
Cooper Investors, an investment management firm, released its Q4 2024 investor letter. Here is what the fund said:
“The largest contributors to returns were Booking Holdings Inc. (NASDAQ:BKNG) and Liberty Formula One (FWONK). BKNG is the leading global travel platform (larger than Airbnb and Expedia combined on an annual room nights booked basis). Operating trends continue to be strong driven by tailwinds from global travel demand and new CFO Ewout Steenbergen finding cost efficiencies following a period of investment. This resulted in third quarter revenue growth of 9% driving Earnings Per Share growth of 16%, a run rate we believe is now sustainable for the business. BKNG has been a highly successful investment, delivering returns of 130% since our first investment in December 2022. But going forward we see less value latency and have consequently begun to redeploy capital into more compelling opportunities.”
9) ServiceNow, Inc. (NYSE:NOW)
10-year Revenue Growth: ~32.03%
Number of Hedge Fund Holders: 110
ServiceNow, Inc. (NYSE:NOW) offers software solutions to structure and automate various business processes through a SaaS delivery model. With businesses increasingly looking for AI-powered solutions in a bid to improve efficiency and decision-making, the company’s expanded AI capabilities can fuel significant growth and market share gains. The company’s platform approach and growing AI capabilities can bring opportunities for expansion over and above its traditional IT management stronghold. ServiceNow, Inc. (NYSE:NOW)’s moves into customer service management as well as human resources exhibit its ability to utilise its core technology in adjacent markets.
The company announced that it has signed a definitive agreement to acquire Logik.ai, an industry leader with a modern, AI-powered, and composable Configure, Price, Quote (CPQ) solution. Logik.ai’s capabilities for sales and commerce are expected to expand ServiceNow, Inc. (NYSE:NOW)’s growing CRM footprint as well as empower sales organizations to close deals faster, fuel productivity levels, and witness greater efficiency. Furthermore, the acquisition can drive ServiceNow, Inc. (NYSE:NOW)’s momentum in Sales and Order Management (SOM).
Lakehouse Capital, a Sydney-based investment manager, released its January 2025 investor letter. Here is what the fund said:
“US-based software company ServiceNow, Inc. (NYSE:NOW) delivered another impressive quarterly result. Revenues grew 21% year-on-year in constant currency terms to $2.9 billion and net income grew 30% year-on-year to $384 million. The company’s key performance indicators remained healthy, with their backlog (remaining performance obligations) growing 23% year-on-year to $22.3 billion (i.e. greater than 2x annual revenue) and renewal rates held firm at 98%. As we have noted in the past, the company’s renewal rates are remarkable as not only are they best-in-class, but they are also extremely consistent, typically in the range of 97% to 99%. These industry-leading renewal rates speak to the mission critical nature of the platform and are a key driver of the long-term annuity value in the business. Zooming out, we continue to believe ServiceNow is one the highest quality software businesses globally as the combination of consistent growth at scale, robust free cash flow generation and a large addressable market make it a compelling opportunity.”
8) Adobe Inc. (NASDAQ:ADBE)
10-year Revenue Growth: ~17.8%
Number of Hedge Fund Holders: 117
Adobe Inc. (NASDAQ:ADBE) operates as a diversified software company. Andy Yu CFA from DBS maintained a “Buy” rating on the company’s stock with a price objective of $660.00. The analyst’s rating is backed by factors demonstrating its healthy financial performance and strategic positioning. Adobe Inc. (NASDAQ:ADBE) remains well-placed to benefit from the current digitalization trend, thanks to its early adoption of the SaaS model, which continues to aid its significant revenue and margin improvements.
Adobe Inc. (NASDAQ:ADBE)’s innovative product offerings, including the Firefly AI platform, and its capability to capture an expanding addressable market continue to fuel its growth prospects, says the analyst. Furthermore, despite the global economic uncertainties and competitive pressures, the analyst believes that a diverse product range and increased customer retention offer a stable foundation for growth. Adobe Inc. (NASDAQ:ADBE)’s extensive integration of AI throughout the product suite places it well to capitalize on the elevated demand for AI-enhanced creative as well as productivity tools.
Adobe Inc. (NASDAQ:ADBE)’s existing user base offers a ready market for upselling AI-powered features, resulting in increased average revenue per user and improved customer retention. Guinness Global Innovators, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Adobe Inc. (NASDAQ:ADBE) faced challenges this year, ending as the Fund’s worst-performing stock (-25.5% USD). Investor concerns about Adobe’s AI strategy and underwhelming earnings reports played a key role in performance over the year. Adobe started the year with optimism surrounding its generative AI innovations and the company seemed poised to capitalize on the surging demand for creative and marketing automation tools. Its AI-driven platform, Firefly, launched in March 2023, quickly gained traction, generating over 16 billion creative outputs and setting adoption records. However, despite this strength, Adobe’s stock has underperformed, as earnings reports over the year have appeared softer than initially expected from investors. The market reaction however was not caused by scepticism about Adobe’s AI products and tools, but rather driven by concerns on the ability to monetise these quickly. The creative design market has seen intensifying competition with competitors like OpenAI, Canva and even startups introducing generative AI content tools such as text-to-video tools. Adobe’s strategy has appeared to be focused on prioritising widespread adoption over immediate monetization, echoing its successful strategy with PDF in previous years. While larger enterprises have adopted and appreciate Adobe’s ‘commercially safe’ tools compared to peers, Adobe sees a large opportunity amongst those that were not traditionally users of the Adobe’s tools, whether enterprise employees or non-enterprise customers and have thus chosen to drive proliferation of their tools in these ‘untapped’ consumers and delay monetisation. Whilst some AI tools have missed revenue expectations through the year, the increased proliferation and the increasing costs of creating content should improve Adobe’s prospects of monetisation into FY25. Further, despite these short-term challenges, Adobe has a track record of high-quality attributes and long-term growth prospects. Its extensive distribution network, and loyal customer base provide it with a durable competitive edge. The company’s subscription-based model, which accounts for over 90% of its revenue, ensures stable cash flows and high margins. Finally, its brand equity as the industry standard in creative and document solutions supports ongoing market leadership, allowing us to remain confident in Adobe’s ability to navigate current challenges and deliver sustained value over time.”
7. Mastercard Incorporated (NYSE:MA)
10-year Revenue Growth: ~11.5%
Number of Hedge Fund Holders: 151
Mastercard Incorporated (NYSE:MA) is engaged in providing transaction processing and other payment-related products and services. The company has been aided by the favourable macroeconomic environment, underpinned by strong consumer spending. In the Q4 2024 earnings call, the company’s management highlighted that affluent consumers benefited from the wealth effect, with the mass segment being supported by the labor market. The global trend focused on digital payments continues to act as a tailwind for Mastercard Incorporated (NYSE:MA)’s business. With more transactions moving online and contactless payments becoming prevalent, the company remains well-placed to benefit from the secular shift.
Furthermore, emerging markets continue to provide significant opportunities for growth as they pivot from cash-based economies to digital payment systems. Mastercard Incorporated (NYSE:MA)’s global brand recognition, together with its established network, offers a healthy foundation for expansion. Through leveraging the technological expertise as well as adapting to local market conditions, Mastercard Incorporated (NYSE:MA) can tap into previously underserved populations, fueling transaction volume growth and enhancing the global footprint.
Bretton Capital Management, an investment management company, released Q4 2024 investor letter. Here is what the fund said:
“Visa and Mastercard Incorporated (NYSE:MA) kept doing their thing, increasing earnings per share by 15% and 12%, respectively, with their stocks returning 22% and 24%. We continue to closely watch the evolving payments space as it seems like everyone’s always trying to displace the card networks. For now, we don’t see anything gaining much traction.”
6) Broadcom Inc. (NASDAQ:AVGO)
10-year Revenue Growth: ~26.5%
Number of Hedge Fund Holders: 161
Broadcom Inc. (NASDAQ:AVGO) is engaged in the designing, developing, and supplying of various semiconductor devices. Morningstar believes that the company’s primary valuation drivers revolve around the growth of its AI chip business as well as its capability to extract growth and operating leverage from VMware. The firm also expects continued inorganic growth over the long term. It expects high AI sales to fuel supernormal growth for Broadcom Inc. (NASDAQ:AVGO) over the next 5 years.
Broadcom Inc. (NASDAQ:AVGO)’s strength in both chips and software enables it to earn terrific accounting and economic profits, and Morningstar believes that its competitive positioning will continue to allow it to do so for the upcoming 20 years. As per the firm, Broadcom Inc. (NASDAQ:AVGO) will focus on healthy cash generation. Over the long term, Morningstar expects that the emphasis will be on improving its dividend and bolting on more acquisitions, which can help drive its cash flow. The company is expected to be a significant beneficiary of rising AI spending, which can spur strong growth for its networking semiconductor sales.
Carillon Tower Advisers, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Broadcom Inc. (NASDAQ:AVGO) had a strong quarter, mostly from the two days that followed its earnings release announcing a significant expansion in the addressable market for its custom AI silicon offerings. As a leader in data center connectivity and custom silicon, the company is now considered to be one of the biggest beneficiaries from the growth in AI spending.”
5. Salesforce, Inc. (NYSE:CRM)
10-year Revenue Growth: ~21.5%
Number of Hedge Fund Holders: 162
Salesforce, Inc. (NYSE:CRM) offers customer relationship management technology that connects companies and customers. Morningstar expects a 5-year compound annual growth rate for total revenue of 8% through the fiscal year 2030, which is expected to be aided by healthy growth in all clouds, with the most significant strength coming from the data cloud. As per the firm, Salesforce, Inc. (NYSE:CRM) has a wide economic moat, stemming mainly from switching costs, with the network effect acting as a secondary moat source.
Elsewhere, Truist Securities remains optimistic about the company’s stock, citing Salesforce, Inc. (NYSE:CRM)’s diverse portfolio, which includes Data Cloud and AI/Agentforce, as well as improvements in other segments like Marketing Cloud, as key factors in achieving growth revitalization. The analyst believes that such elements can act as catalysts for Salesforce, Inc. (NYSE:CRM)’s performance over the upcoming years. Apart from these factors, the analyst highlighted the company’s capital allocation strategy, which is aided by a robust balance sheet.
Salesforce, Inc. (NYSE:CRM)’s extensive product portfolio, large installed base, and global distribution network offer numerous competitive advantages. Mar Vista Investment Partners, LLC, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Investors cheered a solid fiscal year Q3 performance from Salesforce, Inc. (NYSE:CRM), with results driven by strength in subscription revenues, current remaining performance obligations (CRPO), and operating margin. Both the Sales and Service Clouds returned to double-digit growth, fueled by strong adoption of multi-cloud and vertical-specific solutions. These results highlight Salesforce’s ability to address diverse customer needs and sustain growth across its core offerings.
Management expressed significant excitement about Agentforce, an organically developed generative AI product that is garnering enthusiasm from both system integrator partners and customers alike. This innovation underscores Salesforce’s commitment to delivering innovative solutions that enhance customer engagement and drive productivity. While Agentforce’s contributions to subscription revenues and CRPO bookings are still immaterial for now, the growing pipeline provides a solid foundation for optimism around Salesforce’s ability to productize and monetize its generative AI offerings.”
4. NVIDIA Corporation (NASDAQ:NVDA)
10-Year Revenue Growth: ~39.4%
Number of Hedge Fund Holders: 223
NVIDIA Corporation (NASDAQ:NVDA)’s healthy technological leadership in GPU design and AI acceleration places the company well to reap the benefits of AI revolution. Its ongoing innovations, including the Blackwell architecture and Dynamo Operating System, exhibit its capability to remain ahead of the curve in addressing the dynamic needs of AI workloads. NVIDIA Corporation (NASDAQ:NVDA)’s comprehensive approach, which focuses on combining cutting-edge hardware with a strong software ecosystem, helps in creating a robust value proposition for customers. As a result, it is difficult for competitors to replicate the company’s offerings, potentially enhancing its market leadership.
NVIDIA Corporation (NASDAQ:NVDA)’s expansion into enterprise and edge computing markets helps in creating strong new growth avenues. With AI adoption accelerating throughout numerous industries, there seems to be a higher demand for powerful computing solutions at the edge of networks, where low-latency processing remains important. IBM has announced new collaborations with NVIDIA Corporation (NASDAQ:NVDA), including planned new integrations based on the NVIDIA AI Data Platform reference design to support enterprises in putting their data to work to help build, scale as well as manage GenAI workloads and agentic AI applications.
Columbia Threadneedle Investments, an investment management company released its Q4 2024 investor letter. Here is what the fund said:
“NVIDIA Corporation (NASDAQ:NVDA) continued to outperform the market during the fourth quarter. The technology giant and top position in the fund delivered on sky-high expectations during the quarter and reported quarterly expectations that exceeded expectations. The red-hot company provided forward-looking expectations which were regarded as slightly lackluster as compared to prior quarters that smashed expectations. While the stock did churn a bit in the quarter, the AI giant remains top of mind for investors, especially as the company is on pace to satisfy the ‘staggering’ demand for its new product, Blackwell, which is poised to enter the market over the next year. The company’s position of owning all the major pieces of the evolving AI data center enables it to strengthen its competitive position and to define the technology roadmap for generations to come.”
3. Meta Platforms, Inc. (NASDAQ:META)
10-Year Revenue Growth: ~29.4%
Number of Hedge Fund Holders: 262
Morningstar believes that Meta Platforms, Inc. (NASDAQ:META)’s stock is materially undervalued after the company released Llama 4 LLM, which is its next-generation large language model. Considering that the leading AI labs continue to invest billions in frontier models, Morningstar expects that the models will be commodified over time, with all leading-edge models providing similar capabilities. Over time, the firm expects that the current model-based competition in AI can lead to distribution and monetization-based competition.
With the shifting of competitive dynamics of AI, Meta Platforms, Inc. (NASDAQ:META), given its unrivalled user and creator base, could effectively monetize and distribute its GenAI investments, says Morningstar. The firm expects that Meta Platforms, Inc. (NASDAQ:META)’s GenAI models will be used by creators and advertisers to create hyper-personalized content for users. This can benefit user engagement and monetization. Elsewhere, Jefferies reiterated a ‘Buy’ rating on the company’s stock with the price objective of $600.00. The company continues to effectively utilize its abundant data and computational resources, providing a competitive edge, says the analyst.
Nightview Capital, an investment management company that concentrates exclusively on publicly traded equity strategies, released Q4 2024 investor letter. Here is what the fund said:
“Core Opportunity: Meta Platforms, Inc.’s (NASDAQ:META) platforms—Instagram, Facebook, WhatsApp, and Messenger—reach nearly half the world’s population daily, making it one of the most powerful advertising ecosystems globally. With investments in AI and augmented reality (AR), we believe Meta is also creating significant optionality for long-term growth.
Competitive Advantage: Thriving Core Platforms: In Q3, we saw Meta achieve a 23% YoY revenue growth,—a testament to strong user engagement across its ecosystem. The advertising landscape as a whole continues to evolve and we believe Meta’s existing platforms offer a defined advantage in this new world. Existing platforms in the age of AI continue to be the most powerful indicator of future success in our opinion.
AI Leadership: Meta’s AI capabilities and the Llama AI model are driving efficiency and product innovation. In our view, these assets have been under-appreciated by the market while enhancing Meta’s ability to further scale and innovate its leading advertising business…” (Click here to read the full text)
2. Microsoft Corporation (NASDAQ:MSFT)
10-Year Revenue Growth: ~10.8%
Number of Hedge Fund Holders: 317
Cantor Fitzgerald reiterated its “Overweight” rating on Microsoft Corporation (NASDAQ:MSFT)’s stock, citing the company’s healthy performance, particularly in its Azure cloud services. Furthermore, the positive outlook stems from a healthy demand for AI capabilities within Azure, which has been a critical growth driver. Notably, Microsoft Corporation (NASDAQ:MSFT)’s Azure cloud platform was singled out as being mainly well-equipped to handle the current macroeconomic situation. Notably, in Q2 2025, Microsoft Cloud revenue came in at $40.9 billion, reflecting a rise of 21% YoY.
Overall, the commentary from the firm demonstrates a picture of resilience as well as strategic growth for the company, with AI and cloud services remaining at the forefront of the company’s strong market performance. The firm’s analysts believe that Microsoft Corporation (NASDAQ:MSFT) will continue to thrive in the current economic landscape, thanks to its comprehensive product offerings and emphasis on emerging technologies. Microsoft Corporation (NASDAQ:MSFT)’s healthy position in the public cloud market, together with the integration of AI models, offers a strong competitive advantage.
Generation Investment Management, an investment management firm, released its Q4 2024 investor letter. Here is what the fund said:
“Microsoft Corporation (NASDAQ:MSFT), the world’s largest software company, has been in the portfolio for over a decade. We like the firm because its products align closely with society’s evolving needs. As the world digitises, demand for Microsoft’s tools will continue to grow. The company enjoys a wide economic moat – built on its unique market position, deep customer understanding and extensive global footprint.
Microsoft’s management team has a long-term vision. It makes bold investments in future growth, most recently in AI. We forecast that the IT intensity of the economy will double over the next 15 years. Microsoft is a rare company with USD 250 billion in revenues, projected to grow at 16% annually over the next five years.14 Earnings-per share could grow faster. Despite its near-term valuation appearing high, we believe Microsoft is well positioned to lead in the AI era, potentially doubling or tripling its market share. Additionally, we expect returns on capital (ROC) for its AI related investments to match historical levels, despite market scepticism.
There are risks. Demand for AI systems may not materialise as expected, and increasing pricing power among suppliers like Nvidia could pressure margins. Still, from our analysis we see substantial long-term value in this name.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
10-Year Revenue Growth: ~21.7%
Number of Hedge Fund Holders: 339
Goldman Sachs reiterated a “Buy” rating on Amazon.com, Inc. (NASDAQ:AMZN)’s stock with a price objective of $255.00 amidst new tariffs introduced by President Trump. Despite the potential rise in costs for the company, Eric Sheridan, the firm’s analyst, lauded Amazon.com, Inc. (NASDAQ:AMZN)’s ability to mitigate such impacts through various strategies. The potential mitigating actions consist of negotiations with vendors to share the challenges related to the increased input costs, adjustment of prices on some items for customers, as well as shifting the mix of vendors and products sold on its platform to those witnessing reduced tariffs or to the US domestic alternatives.
Amazon.com, Inc. (NASDAQ:AMZN)’s investments in AI technology place it well to reap the benefits coming from the increased demand for AI-driven solutions. Such investments can result in improved product recommendations in e-commerce, more efficient logistics operations, and enhanced cloud services for the enterprise customers. Overall, the AI integration throughout Amazon.com, Inc. (NASDAQ:AMZN)’s ecosystem can help create a competitive advantage and fuel growth throughout multiple business segments.
Lakehouse Capital, a Sydney-based investment manager, released its February 2025 investor letter. Here is what the fund said:
“Amazon.com, Inc. (NASDAQ:AMZN) posted a solid quarterly result with ongoing cost discipline driving significant operating leverage across the business. Net sales grew 10% year-over-year (11% in constant currency terms) to $187.8 billion whilst operating income grew 61% to $21.2 billion, well ahead of guidance and analysts’ expectations. Growth within the core e-commerce business remained healthy as the company delivered a record breaking Black Friday and Cyber Monday holiday shopping event. For the past two years now, management has been laser focused on driving efficiencies across the retail operations and these efforts are continuing to pay off. Notably, retail margins for their international segment have now been positive for four straight quarters and currently sit at 3.0%, which is pretty remarkable considering that just over two years ago they sat at -8.9%.
The company’s second largest segment, Amazon Web Services (AWS), also performed well with growth steady at 19% year-on-year. AI demand remains strong with management noting that AI related revenue is still growing triple digits. Big picture, AWS remains the leading cloud provider (in what is an increasingly two-horse race with Microsoft’s Azure) and with 85% of global IT spend still on-premises there is still plenty of runway for future growth. At current levels, Amazon’s valuation is attractive at 13x EBITDA, and we remain confident that patient shareholders will be treated well as the company is set to deliver many years of solid revenue growth and margin expansion.”
While we acknowledge the potential of AMZN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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