In this article, we will take a detailed look at the Top 10 Stocks to Buy According to Two Sigma Investments.
Two Sigma Investments, LP, a New York City-based hedge fund, is known for its advanced use of artificial intelligence, machine learning, and distributed computing in financial trading. Founded by John Overdeck and David Siegel, the firm operates with a strong emphasis on technology-driven investment strategies. As a leader in quantitative finance, Two Sigma employs a rigorous, scientific approach to generating alpha in global markets, leveraging vast datasets and high-performance computing to identify patterns and market inefficiencies. With a workforce of approximately 1,700 employees, two-thirds of whom are dedicated to research and development, the firm remains at the forefront of data-driven investment management.
At the core of Two Sigma’s approach is its commitment to systematic research, blending creative insights with cutting-edge data analysis. Drawing from fields such as artificial intelligence, economics, and distributed computing, its analysts develop models that not only make financial and economic sense but also evolve with market conditions. The firm integrates systematic risk management tools and human oversight, ensuring disciplined execution and adaptability in dynamic financial environments. By harnessing insights from thousands of diverse data sources, Two Sigma continues to refine its strategies, pushing the boundaries of quantitative investing. The firm’s investment in high-performance computing enables it to process and analyze massive datasets with speed and precision. This data-driven methodology allows for the identification of complex market relationships that traditional investment strategies might overlook. With a steadfast focus on innovation, Two Sigma remains a leader in quantitative finance, continuously advancing the frontiers of data science and algorithmic trading.
The co-founder of Two Sigma Investments, John Albert Overdeck is a prominent American hedge fund manager and a lifelong mathematics enthusiast. He pursued higher education at Stanford University, where he earned both a bachelor’s degree in mathematics (with distinction) and a master’s degree in statistics. His expertise in quantitative analysis and data-driven decision-making laid the foundation for his future success in finance and technology.
Before co-founding Two Sigma Investments in 2001, Overdeck held key leadership roles at major financial and technology firms. He began his career at D.E. Shaw & Co., where he rose to the position of managing director, overseeing Japanese equity investments and the firm’s London investment management operations. He later joined Amazon.com as vice president and technical assistant to founder Jeff Bezos, leading the company’s customer relationship management initiatives and scaling its personalization and targeted marketing technologies. His work at Amazon played a crucial role in enhancing the company’s data-driven customer engagement strategies.
Beyond his professional achievements, Overdeck is a dedicated philanthropist and advocate for mathematics and education. He serves as chair of the Institute for Advanced Study, the National Museum of Mathematics, and the Bedtime Math Foundation. Additionally, he is a board member of Robin Hood and president of the Overdeck Family Foundation, which funds innovative programs aimed at improving education. Recognized for his contributions to technology and investment management, Overdeck was honored by the Academy of Achievement in 2017 for his pioneering work in the field.
David Mark Siegel is a distinguished computer scientist, entrepreneur, and philanthropist. As the co-founder and co-chairman of Two Sigma, he has played a pivotal role in integrating advanced technology and data science into investment management. Siegel pursued higher education at Princeton University, earning a degree in electrical engineering and computer science, followed by a PhD in computer science from the Massachusetts Institute of Technology. During his time at MIT, he conducted groundbreaking research at the Artificial Intelligence Laboratory, further cementing his expertise in computational systems.
Beyond his professional achievements, Siegel is deeply committed to philanthropy, particularly in education, science, and technology. In 2011, he founded the Siegel Family Endowment to support initiatives that explore the societal impact of technology. He serves as Chairman of the Board of Overseers at Cornell Tech and holds board positions at Carnegie Hall and the Robin Hood Learning & Tech Fund. Additionally, he co-founded the Scratch Foundation, which promotes creative problem-solving through coding education for children. His involvement extends to advisory roles at Khan Academy, Stanford’s Center on Philanthropy and Civil Society, and Princeton’s Center on Information Technology Policy. As a member of the MIT Corporation, he contributes to initiatives such as MIT Quest for Intelligence, which aims to advance human understanding of artificial intelligence and its applications. Through his work, Siegel continues to shape the future of technology and education, ensuring lasting impact in both fields.
In its latest 13F filing for the fourth quarter of 2024, Two Sigma Investments disclosed approximately $43.22 billion in managed 13F securities, with its top ten holdings comprising 19.86% of its extensively diversified portfolio.
John Overdeck of Two Sigma Advisors
Our Methodology
The stocks discussed below were picked from Two Sigma Investments’ Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1,009 hedge funds tracked by Insider Monkey in the fourth quarter of 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Top 10 Stocks to Buy According to Two Sigma Investments
10. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders as of Q4: 126
Two Sigma Investments’ Equity Stake: $517.36 Million
Known as an American multinational automotive and clean energy company, Tesla, Inc. (NASDAQ:TSLA) is headquartered in Austin, Texas. The stock has dropped over 40% since January’s peak, wiping out the previous gains it experienced after the US Election Day. The decline is largely driven by falling sales worldwide and a lack of effective action from its CEO to address the downturn.
The company is facing a major crisis, having reported its first-ever global sales decline last year, with this year showing no significant improvement. Tesla, Inc. (NASDAQ:TSLA) is particularly struggling in China, where competition from domestic manufacturers has intensified. In the past month, Tesla’s shipments in China dropped 49% year-over-year, while sales in Europe have also slumped. Germany saw an especially steep decline, with Tesla sales plummeting 76% last month, partially due to backlash over Elon Musk’s political affiliations.
The situation worsened with bad news from China, where rival automaker BYD unveiled a charging system that outperforms Tesla’s, providing 250 miles of range in just five minutes. Tesla, Inc. (NASDAQ:TSLA) also responded to its declining market share in China by offering a free monthlong trial of its Full Self-Driving software, which analysts view as a desperate move.
Following these developments, Tesla, Inc. (NASDAQ:TSLA) stock fell 5% in the U.S. on March 17 and another 5% on March 18. While the company remains the leading EV brand in the U.S., increasing competition and concerns over Musk’s political stance are damaging its brand value. JPMorgan analysts recently noted that Tesla’s rapid decline in brand perception is nearly unprecedented in the automotive industry. Meanwhile, a growing movement known as “Tesla Takedown” is gaining traction on social media, urging consumers to boycott the brand, sell their Tesla vehicles, and protest at Tesla showrooms.
Tesla, Inc. (NASDAQ:TSLA)’s Q4 2024 earnings report seemed to have predicted these challenges, with revenue increasing 2.15% year-over-year to $25.71 billion, but operating profit falling 23.3% to $1.58 billion. Earnings per share dropped 4.8% below analyst expectations, underscoring financial difficulties amid heightened competition and production setbacks.
Despite these struggles, Tesla, Inc. (NASDAQ:TSLA) remains a dominant force in the EV industry, with cutting-edge technology, strong brand recognition, and continued innovation in autonomous driving. The company’s leadership in the U.S. market, coupled with its ability to rapidly adapt, suggests that Tesla could still be a top stock to buy as a long-term investment for those willing to weather short-term volatility.
Polen Focus Growth Strategy stated the following regarding Tesla, Inc. (NASDAQ:TSLA) in its Q4 2024 investor letter:
“The largest relative detractors in the quarter were Tesla, Inc. (NASDAQ:TSLA) (not owned), Thermo Fisher Scientific, and Broadcom (not owned). We’ve spoken at length about our rationale for not owning Tesla. The stock enjoyed a 54% return during the quarter, with effectively all of the share price performance strength coming in the post-election period, as the market expressed a positive view on Elon Musk’s prominent role in the incoming Trump administration and its potential implications for Tesla. While we agree this development should be a net positive for Tesla and recognize the company’s interesting future prospects for autonomous driving and humanoid robots, its current valuation demands that shareholders pay primarily for potential innovations that have yet to materialize, with uncertain risks and timelines, presenting a different type of risk profile than we are comfortable with. Today, Tesla is an automobile manufacturer limited to the higher-income segment and is increasingly challenged to sell vehicles when interest rates are not zero. As such, we continue to question the company’s long-term growth profile, its ability to scale a large robotaxi service (which seems to be the source of euphoria in Tesla shares), and its corporate governance.”
9. Mastercard Incorporated (NYSE:MA)
Number of Hedge Fund Holders as of Q4: 151
Two Sigma Investments’ Equity Stake: $567.64 Million
Mastercard Incorporated (NYSE:MA), established in 1966, is a global financial services corporation specializing in the processing of financial transactions. Headquartered in Purchase, New York, the company provides a comprehensive suite of payment solutions and related services.
On January 20, Mastercard Incorporated (NYSE:MA) announced its financial results for the fourth quarter and full year of 2024, showcasing strong business performance. With a market capitalization of $504 billion, for the fourth quarter, the company reported a net income of $3.3 billion, with diluted earnings per share (EPS) of $3.64. Adjusted net income stood at $3.5 billion, with an adjusted diluted EPS of $3.82. The company’s net revenue for the quarter totaled $7.5 billion, marking a 14% year-over-year increase, or 16% when adjusted for currency fluctuations.
CEO Michael Miebach highlighted the resilience of consumer spending, stating, “Affluent consumers have benefited from the wealth effect, while the mass segment remains supported by the labor market.” Mastercard’s cross-border volume, which measures transactions made outside the country of card issuance, surged by 20% during the quarter. Chief Financial Officer Sachin Mehra attributed this increase to early travel spending and heightened cryptocurrency-related transactions. According to analysts, while a seasonal increase in transaction volumes was expected due to strong holiday spending, the surge in cross-border transactions was an unexpected positive development.
Throughout the fourth quarter of 2024, Mastercard Incorporated (NYSE:MA) repurchased 6.5 million shares for $3.4 billion and distributed $606 million in dividends. Over the full year of 2024, the company repurchased 23 million shares for $11 billion while paying out $2.4 billion in dividends.
Mastercard’s strong revenue growth, expanding cross-border transaction volume, and consistent share repurchase program demonstrate its financial strength and investor-friendly approach. With its diversified payment solutions and a solid strategy for long-term expansion, Mastercard Incorporated (NYSE:MA) remains a compelling investment opportunity.
Conventum – Alluvium Global Fund stated the following regarding Mastercard Incorporated (NYSE:MA) in its Q4 2024 investor letter:
“Last quarter we wrote about the credit card companies and the Fund’s latest investment, Visa (up 15.2%). With its strong share price performance, that position had grown to be greater than 5%. As we had discussed here, we consider there to be negligible differences in investment merits when compared to Mastercard Incorporated (NYSE:MA) (up 6.8%). Whilst Visa appears a little cheaper on traditional price metrics, our view is that Mastercard has marginally higher growth prospects. Irrespective, both are deserving positions in the portfolio, and given their similarities, and the 5/10/40 rule, in order for us to maintain maximum portfolio flexibility it made sense to sell a little Visa and buy a little Mastercard, and their combined position is 6.2%.”
8. Visa Inc. (NYSE:V)
Number of Hedge Fund Holders as of Q4: 181
Two Sigma Investments’ Equity Stake: $616.21 Million
Visa Inc. (NYSE:V), a leading multinational financial services corporation headquartered in San Francisco, California, specializes in facilitating electronic funds transfers worldwide. The company’s extensive portfolio includes Visa-branded credit, debit, and prepaid cards, making it a dominant player in the global payments industry. On January 30, the company announced its financial results for the first quarter of fiscal year 2025, surpassing market expectations. The company reported earnings per share (EPS) of $2.75, exceeding analysts’ forecasts of $2.66 and reflecting a 14% year-over-year increase. Net revenue also outperformed predictions, reaching $9.51 billion compared to the anticipated $9.35 billion, representing a 10% increase from the previous year.
Following the strong financial results, Visa Inc. (NYSE:V) stock responded positively, gaining 2.13% during regular trading hours and an additional 1.81% in after-hours trading. By the close of after-hours trading, the stock price stood at $349.25, marking a 3.94% increase from the prior closing price.
Visa Inc. (NYSE:V) remains optimistic about its performance for the rest of the fiscal year, projecting full-year adjusted net revenue growth in the low double digits and full-year adjusted EPS growth in the low teens. The company continues to prioritize innovation and the expansion of its value-added services to drive long-term growth.
CEO Ryan McInerney underscored Visa’s leadership in tokenization, stating, “We’ve now got more than 12,500,000,000 tokens across the ecosystem.” He also emphasized the transformative role of artificial intelligence in digital commerce and expressed confidence in Visa’s ability to navigate regulatory challenges.
Visa Inc. (NYSE:V)’s consistent revenue growth, strong financial performance, and ongoing innovation in payment technology make it an attractive investment option. With its leadership position in digital payments and a focus on expanding services, Visa is well-positioned for continued long-term success.
Meridian Hedged Equity Fund stated the following regarding Visa Inc. (NYSE:V) in its Q4 2024 investor letter:
“Visa Inc. (NYSE:V) is the world’s largest retail electronic payments network. We hold Visa in the portfolio because of its formidable competitive moat, built on network effects spanning billions of cards and millions of merchants globally. The company continues to benefit from the secular shift toward electronic payments while expanding its portfolio to include high-growth adjacent offerings. While U.S. market penetration is mature, international markets—particularly in emerging economies, where cash usage remains prevalent— offer significant growth opportunities. Visa’s operating model demonstrates strong leverage, with incremental revenue efficiently flowing to the bottom line. This quarter, Visa outperformed expectations across key metrics, with payment volumes and transaction growth proving resilient despite macro uncertainties. Looking ahead, we anticipate continued momentum into fiscal 2025, driven by the ongoing transition to digital payments, international expansion, and the scaling of newer business lines.”
7. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders as of Q4: 115
Two Sigma Investments’ Equity Stake: $619.45 Million
Eli Lilly and Company (NYSE:LLY), established in 1876, is a multinational pharmaceutical firm headquartered in Indianapolis, Indiana, with operations spanning 18 countries. Its products are available in approximately 125 countries, highlighting its extensive global presence. Beyond its pharmaceutical innovations, the company prioritizes inclusive clinical trials and is dedicated to making its medications both accessible and affordable to diverse populations.
Two Sigma Investments recently boosted its holdings in Eli Lilly and Company (NYSE:LLY) by 50%, increasing its stake from 536,000 shares in Q3 2024 to 802,400 shares in Q4 2024. This investment, valued at over $619 million, positions the company as the hedge fund’s seventh most valuable holding in its 13F filings for the quarter ending December 2024.
On February 6, 2025, Eli Lilly and Company (NYSE:LLY) announced its fourth-quarter 2024 financial results, showcasing impressive revenue growth and a promising outlook. CEO David A. Ricks highlighted the company’s progress in addressing chronic diseases linked to obesity, expanding manufacturing operations, and introducing key new therapies. Quarterly revenue soared by 45% year-over-year to $13.53 billion, driven largely by the strong performance of its products Mounjaro and Zepbound. Earnings per share (EPS) more than doubled, surging 114% to $5.32. Looking ahead, Eli Lilly forecasts 2025 revenue in the range of $58.0 billion to $61.0 billion, with an EPS estimate between $22.05 and $23.55, reinforcing confidence in its future financial trajectory.
According to Insider Monkey’s database, 115 hedge funds held positions in Eli Lilly and Company (NYSE:LLY) at the close of Q4 2024, with a combined value nearing $16.65 billion—an increase from 106 funds in the prior quarter. This growing hedge fund interest reflects strong confidence in the company’s long-term growth prospects and its robust pharmaceutical pipeline.
With a history of innovation, strong revenue performance, and increasing investor confidence, Eli Lilly and Company (NYSE:LLY) remains a top stock to buy according to Two Sigma Investments. Its dominance in high-demand therapeutic areas and ongoing product launches position the company for sustained success in the pharmaceutical sector.
RiverPark Large Growth Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its Q4 2024 investor letter:
“Eli Lilly and Company (NYSE:LLY): LLY was a top detractor in the fourth quarter following a rare revenue miss in the company’s 3Q update. The greater than $1 billion miss in the tirzepatide complex (Mounjaro/Zepbound) was caused by a combination of factors, including wholesaler stocking patterns (2Q inventory build, 3Q sell through), refrigerated supply chain constraints, timing of the company’s direct-to-consumer efforts, and the pace of international market launches. We believe the diabetes/obesity/weight-loss market is enormous and that current GLP-1 drugs, though no longer supply constrained, are greatly in demand. We are confident that LLY’s recent sales shortfall was supply chain-related and that the company’s tirzepatide franchise growth will soon reaccelerate.
LLY discovers, develops, manufactures, and markets pharmaceutical products. The company manufactures and distributes products through facilities in the United States and seven other countries and sells into 110 countries. The company has a broad and deep portfolio of products including a focus on diabetes, oncology, immunology and neuroscience. More recently, LLY’s GLP-1 diabetes drug Mounjaro and obesity drug Zepbound, have delivered strong revenue growth, and investors are optimistic that the company’s recently approved Alzheimer drug, Kisunla, will add to that growth.
LLY has a stable portfolio of franchise products, which enables it to invest heavily in its product pipeline. We believe that this combination of franchise and growth products will drive high teens revenue growth and a four-fold increase in free cash flow in the next five years.”
6. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders as of Q4: 262
Two Sigma Investments’ Equity Stake: $725.97 Million
Meta Platforms, Inc. (NASDAQ:META) is making a significant move into artificial intelligence hardware with its first proprietary chip designed for AI training. This initiative aims to decrease reliance on Nvidia and subsequently lower infrastructure costs. The company has begun deploying the chip on a small scale and may expand production if the initial tests prove successful, marking a key step in Meta’s long-term strategy to develop custom silicon. Meta has projected expenses of up to $119 billion for 2025, with AI infrastructure playing a crucial role. This new training chip is part of Meta’s broader Meta Training and Inference Accelerator (MTIA) program, which, despite past setbacks, has achieved success with its first inference chip for recommendation systems. While Meta Platforms, Inc. (NASDAQ:META) remains a significant Nvidia customer, its efforts to create in-house AI chips highlight its ambition to control more aspects of its AI ecosystem, especially as doubts grow over the long-term scalability of large language models.
Meta Platforms, Inc. (NASDAQ:META) has further solidified its leadership in digital advertising through rapid AI advancements, leading to substantial financial growth despite shifting industry regulations. In its Q4 2024 earnings report, the company recorded a 21% year-over-year revenue increase to $48.4 billion, exceeding analyst estimates of $47 billion. Earnings per share (EPS) surged 50% to $8.02, significantly outpacing the projected $6.76.
Investor confidence in Meta Platforms, Inc. (NASDAQ:META) remains strong, with growing institutional support and heightened hedge fund interest. By the end of Q4 2024, 262 hedge funds held stakes in the company, totaling approximately $59.4 billion—an increase from 235 funds in the prior quarter, as reported by Insider Monkey’s database. With its robust financials, continued AI innovations, and dominance in digital advertising, Meta is well-positioned for long-term success. The company’s strategic focus on AI and advertising technology underscores its ability to sustain growth and maintain industry leadership, making it an attractive investment option.
5. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders as of Q4: 174
Two Sigma Investments’ Equity Stake: $747.02 Million
Alphabet Inc. (NASDAQ:GOOG) delivered a strong fourth-quarter performance, surpassing market expectations with earnings of $2.15 per share on revenue of $96.47 billion. This outperformed analyst projections of $2.13 per share and showed significant growth from the prior year’s fourth quarter, where earnings were $1.64 per share on revenue of $86.3 billion. CEO Sundar Pichai reaffirmed Alphabet’s commitment to innovation, outlining plans to invest approximately $75 billion in capital expenditures for 2025, with a primary focus on advancing generative AI. The company views AI as a critical growth driver, particularly in the cloud computing sector, reinforcing its efforts to maintain a competitive edge. For Alphabet Inc. (NASDAQ:GOOG)’s upcoming earnings report, analysts project earnings per share of $2.04 for the quarter, a 7.94% increase year-over-year, with revenue expected to rise 11.94% to $75.67 billion. For the full fiscal year, Alphabet’s earnings are forecasted to grow 10.57% to $8.89 per share, while revenue is estimated to reach $334.55 billion, reflecting a 13.36% increase from the prior year.
To further strengthen its position in cloud computing and cybersecurity, Google LLC has signed a definitive agreement to acquire Wiz, Inc., a leading cloud security platform, for $32 billion in an all-cash transaction. Once finalized, Wiz will become part of Google Cloud, marking a significant step in enhancing cybersecurity capabilities and expanding multi-cloud adoption. With the rapid evolution of AI and cloud services, security concerns have become a top priority for businesses and governments worldwide. Wiz’s cloud-native security solutions integrate seamlessly with major platforms like Amazon Web Services, Microsoft Azure, and Oracle Cloud, providing organizations with a comprehensive defense against emerging cyber threats.
This acquisition solidifies Alphabet Inc. (NASDAQ:GOOG)’s position as a dominant force in cloud computing, further differentiating Google Cloud from its competitors. With its robust earnings growth, aggressive AI expansion, and now a strengthened cloud security business, GOOG remains a top stock to buy, offering significant potential for long-term investors.
Columbia Threadneedle Global Technology Growth Strategy stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) (parent company Alphabet) generated strong double-digit returns during the quarter, as the company’s tremendous innovation in AI, along with strength in its core business of search and advertising and a healthy focus on profit growth and shareholder friendly capital allocation, shifted investor focus away from ongoing litigation with the Department of Justice related to market dominance. In the month of December alone, Google released to the public Gemini 2.0, its most capable AI model yet, as well as new generative image and vision models. And if that was not enough, Google also announced progress in quantum computing. Once considered an AI laggard, the flurry of product announcements and AI development did not go unnoticed by the market and the stock reacted accordingly.”
4. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders as of Q4: 339
Two Sigma Investments’ Equity Stake: $974.62 Million
Two Sigma Investments recently increased its holdings in Amazon.com, Inc. (NASDAQ:AMZN) by 122%, boosting its stake from 2 million shares in Q3 2024 to 4.44 million shares in Q4 2024. This investment, valued at over $974 million, positions Amazon as the hedge fund’s fourth most valuable holding in its 13F filings for the quarter ending December 2024. Hedge fund interest in the company also increased, with 339 funds tracked by Insider Monkey holding positions worth nearly $69.04 billion by the end of the quarter, up from 286 funds in Q3.
Amazon.com, Inc. (NASDAQ:AMZN) experienced a substantial rise in operating income for the fourth quarter of 2024, climbing to $21.2 billion from $13.2 billion in the same period the previous year. Net income saw an even more impressive surge, doubling to $20 billion. The company’s cloud computing segment, Amazon Web Services (AWS), continued to be a significant growth driver, achieving a 19% increase in quarterly revenue, bringing it to $28.8 billion. For the full year, its net sales expanded by 11% to $638 billion, while operating income nearly doubled, reaching $68.6 billion. Net income for the year rose to $59.2 billion, and the company posted a record-high operating income, marking an 86% increase from the previous year. The rapid growth of AWS, fueled by increased enterprise adoption of artificial intelligence (AI) applications, continues to be a fundamental factor in Amazon.com, Inc. (NASDAQ:AMZN)’s long-term expansion.
Despite these strong financial results, some investors remained concerned about Amazon’s substantial capital expenditures as it plans to allocate $100 billion in capital expenditures for 2025, a sharp rise from the $77.7 billion spent in 2024. The majority of this investment is targeted toward AI infrastructure within AWS, aligning with Amazon.com, Inc. (NASDAQ:AMZN)’s strategy to strengthen its position in cloud computing. While CEO Andy Jassy remains optimistic about this aggressive investment approach, some market participants fear that such high expenditures could pressure profit margins.
3. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders as of Q4: 317
Two Sigma Investments’ Equity Stake: $1.22 Billion
Microsoft Corporation (NASDAQ:MSFT) continues to solidify its dominance in cloud computing and artificial intelligence, reporting strong Q4 financial results with a 12.27% year-over-year revenue increase to $69.63 billion and earnings per share (EPS) of $3.23, surpassing market expectations. Despite its financial success, the company is facing heightened regulatory scrutiny, particularly concerning its investment in OpenAI and cloud licensing policies. U.S. regulators are examining whether these practices foster innovation or stifle competition, a probe that could influence Microsoft’s long-term growth strategy and legal landscape.
Beyond the regulatory challenges that it faces, Microsoft Corporation (NASDAQ:MSFT) is making significant strides in technological innovation. The company recently announced a ZAR 5.4 billion investment to expand cloud and AI infrastructure in South Africa, reinforcing its commitment to digital transformation in emerging markets. This builds on its previous ZAR 20.4 billion investment in the country’s data centers, aiming to enhance cloud accessibility for businesses, government entities, and startups.
Additionally, Microsoft Corporation (NASDAQ:MSFT) is addressing the global digital skills gap by committing to train one million South Africans by 2026, with 50,000 receiving Microsoft-paid certifications in AI, cybersecurity, and data science. In 2024 alone, the company’s Skills for Jobs initiative trained over 150,000 individuals and helped 1,800 secure employment, strengthening South Africa’s AI-driven workforce. The company’s long-standing support for education and technology accessibility, including over $100 million in software donations, underscores its broader mission of fostering sustainable economic growth.
Despite regulatory scrutiny, Microsoft Corporation (NASDAQ:MSFT) remains a formidable force in the tech industry, driven by its leadership in cloud computing, AI, and quantum research. The company’s historical ability to navigate challenges and adapt to market shifts suggests that any short-term volatility could lead to long-term opportunities. As it continues to invest in AI infrastructure, digital skills development, and cutting-edge computing, Microsoft is well-positioned for sustained growth, making it a top stock to buy for investors seeking both innovation and stability.
2. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders as of Q4: 223
Two Sigma Investments’ Equity Stake: $1.23 Billion
NVIDIA Corporation (NASDAQ:NVDA) continues to lead the AI chip market, commanding an 80% share and maintaining its dominance despite high GPU prices. Demand for its latest Blackwell architecture has exceeded supply, reinforcing its stronghold as the preferred supplier for major tech companies. This position has propelled the company’s financial success, with Nvidia reporting a record $39.3 billion in revenue for its most recent quarter—an extraordinary 78% year-over-year surge, largely driven by a 93% increase in its data center segment. As AI adoption accelerates, Nvidia’s innovation in hardware and software, including the launch of its DGX personal AI supercomputers, further cements its role as the backbone of AI infrastructure. The DGX Spark and DGX Station bring enterprise-grade AI capabilities to desktops, allowing researchers and developers to prototype and deploy advanced models with unprecedented efficiency. These systems integrate seamlessly with Nvidia’s CUDA-X AI platform and NIM microservices, making AI computing more accessible across industries.
The company’s recent launch of DGX personal AI supercomputers, powered by the Grace Blackwell platform, exemplifies its commitment to pushing the boundaries of AI accessibility. By partnering with major manufacturers such as ASUS, Dell, HP, and Lenovo, NVIDIA Corporation (NASDAQ:NVDA) is ensuring that AI development tools reach a broader audience, fostering continued innovation.
Looking ahead, NVIDIA Corporation (NASDAQ:NVDA) remains confident in its long-term growth trajectory, forecasting $43 billion in revenue for the April quarter, a 65% year-over-year jump, exceeding analyst projections of $42.1 billion. While concerns over competition and potential slowdowns persist, the company’s commitment to annual GPU updates and continuous innovation makes it difficult for rivals to capture significant market share. Its leadership in AI hardware, combined with investments in cloud and data center solutions, positions it as a key player in shaping the future of artificial intelligence.
With the growing demand for high-performance AI computing and the expansion of its AI ecosystem, NVIDIA Corporation (NASDAQ:NVDA) appears well-positioned to sustain its dominance and drive technological advancements in the years ahead.
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders as of Q4: 166
Two Sigma Investments’ Equity Stake: $1.39 Billion
Apple Inc. (NASDAQ:AAPL) reported strong Q4 2024 financial results with revenue reaching $124.3 billion, a 3.95% year-over-year increase, and earnings per share of $2.40, exceeding analyst expectations. Investor confidence in the company remains high, as reflected in the company’s decision to issue a quarterly dividend of $0.25 per share. Hedge fund interest in Apple has also surged, with 166 funds tracked by Insider Monkey holding positions worth nearly $118.56 billion by the end of the quarter.
However, the company faces growing uncertainty as the Trump administration enforces higher tariffs on Chinese imports, potentially disrupting its supply chain and impacting profit margins. In response, Apple Inc. (NASDAQ:AAPL) is making a major push to expand its U.S. manufacturing footprint, committing $500 billion over the next four years to domestic production and technological advancements. Additionally, the company plans to open a 250,000-square-foot manufacturing facility in Texas by 2026, aligning with the Trump administration’s reshoring efforts.
At the same time, Apple Inc. (NASDAQ:AAPL) is expanding its financial ecosystem, with Apple Pay preparing for a broader rollout in South Korea. After launching exclusively with Hyundai Card, Apple is now in discussions with major issuers like Shinhan Card and KB Kookmin Card to expand its availability. However, concerns over payment commission fees remain, with South Korea’s financial regulators emphasizing that costs should not be passed onto consumers or merchants. Meanwhile, Apple’s expansion could intensify competition with Samsung Pay, which currently does not charge transaction fees, potentially prompting Samsung to introduce charges.
As of Q4 2024, Two Sigma Investments held over 5.5 million shares of Apple Inc. (NASDAQ:AAPL), valued at $1.39 billion. Hedge fund interest in the company also increased, with 166 funds tracked by Insider Monkey holding positions worth nearly $118.56 billion by the end of the quarter, up from 158 funds in Q3.
Overall, Apple Inc. (NASDAQ:AAPL) ranks first on our list of top 10 stocks to buy according to Two Sigma Investments. While we acknowledge the potential for AAPL 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 AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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