We recently compiled a list of the 10 Best Tech Stocks to Buy According to Brad Gerstner. In this article, we are going to take a look at where Tesla, Inc. (NASDAQ:TSLA) stands against the other tech stocks.
Gerstner is Bullish on Tech in 2024
On December 1, 2023, Brad Gerstner, the CEO of Altimeter Capital, appeared in an interview on CNBC where he explained that tech stocks are expected to outperform non-tech stocks in 2024. Over the past 10 years, tech earnings have compounded at almost 16% and non-tech earnings have compounded at 6%. 2023 was a rebound year for the tech industry after a downturn in 2022 due to rising interest rates. Big Tech companies and their operational efficiencies have poised them for strong growth. While inflation and interest rates will determine what goes down, companies that have invested in augmented intelligence will experience secular growth. Gerstner thinks that the spread between 16% and 6% will be a recurring trend in 2024.
Gerstner Thinks Now is the Right Time to Invest in Tech
On June 11, Brad Gerstner made another appearance on CNBC and addressed the speculation surrounding the software industry. Gerstner suggested that despite headwinds, the software industry is still valuable as companies and startups are still making deals. Gerstner believes there are three main reasons for the downward trajectory of the software industry. He thinks that CEOs and CTOs are cautious when it comes to making investments in software. Executives want a clearer picture of the AI boom before making risky investments. Moreover, interest rates are higher than expectations, due to delayed rate cuts and compressing multiples. Lastly, general uncertainty about the future has been detrimental to the growth of the software industry. Gerstner pointed out that since the software industry is trading at 20% below its ten-year average, this may be the best time to allocate stakes in software companies. You can also take a look at the best Robinhood stocks under $20.
Gerstner thinks data and databases are extremely vital to AI applications. He thinks that companies using data to power AI are far ahead of companies simply automating services. Big Tech companies have data at the forefront of all their artificial intelligence applications. You can also read our piece on the stocks hedge funds are crazy about right now.
Brad Gerstner is bullish on tech, and particularly software and AI. In Q1 2024, he initiated 6 new positions and also raised his stakes in 2 stocks, ending the quarter with a portfolio of $6.5 billion in 13F securities. With that, let’s discuss his top tech stock picks.
Our Methodology
We scanned Altimeter Capital’s Q1 portfolio and picked growth stocks from the fund’s top 13F holdings. Additionally, we’ve also added overall hedge fund sentiment, as of Q1 2024. 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Note: All pricing data is as of June 28.
25 Most In Demand Cars Heading into 2024
Tesla, Inc. (NASDAQ:TSLA)
Altimeter Capital’s Stake Value: $103,663,363
Number of Hedge Fund Holders: 74
Tesla, Inc. (NASDAQ:TSLA) is the 9th largest holding of Brad Gerstner, accounting for 1.59% of his portfolio. Gerstner increased his position in the stock by 277% from the previous quarter. The company is making strides in autonomous driving. The FSD V12, a fully autonomous vehicle, has driven over 300 billion miles. The FSD chip, developed by TSLA, is an AI inference chip capable of running Tesla’s (NASDAQ:TSLA) autonomous vehicle software. The company is also actively working to advance its core AI infrastructure and AI compute, by doubling its training in AI and compute compared to the previous quarter. The Tesla Bot, a general-purpose humanoid robot can perform a variety of mundane and monotonous tasks.
Overall, Tesla, Inc. (NASDAQ:TSLA) was held by 75 hedge funds with total stakes amounting to $4.95 billion. Analysts hold a consensus Buy opinion on TSLA and the Street-high target of $310 implies an upside of 57% from current levels. On May 7, Brad Gerstner appeared in an interview on CNBC, where he discussed the future of Tesla, Inc. (NASDAQ:TSLA) and its exemplary position in AI and data. Gerstner likes Tesla’s (NASDAQ:TSLA) competitive advantage in AI and self-driving and believes it’s “underappreciated”. Here are some comments from the interview:
“Well, first, let me say I think Elon has done an extraordinary job, and I think his advantage in A.I. and full self-driving relative to all the other manufacturers in the world is deeply under appreciated. A ChatGPT moment for self-driving after ten years of marginal improvements, we had a profound breakthrough around imitation learning I think that will be an incredible asset to the company.”
He then discussed how companies need to have enough supporting data to compete with Tesla, Inc. (NASDAQ:TSLA), which is quite challenging at the moment. Here are some additional comments from the interview:
“I don’t think it’s an asset that can be replicated by other OEMs. Unless you have the data, you’re going to have a very hard time catching Tesla in full self-driving I don’t think BYD will be able to play in that game either.”
Overall TSLA ranks 9th on our list of the best tech stocks to buy according to Brad Gerstner. You can visit 10 Best Tech Stocks to Buy According to Brad Gerstner to see the other tech stocks that are on hedge funds’ radar. While we acknowledge the potential of TSLA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.