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 Uber Technologies, Inc. (NYSE:UBER) 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.
A close up view of a hand holding a smartphone, using a ride sharing app.
Uber Technologies, Inc. (NYSE:UBER)
Altimeter Capital’s Stake Value: $1,026,784,834
Number of Hedge Fund Holders: 130
Ride-hailing company Uber Technologies, Inc. (NYSE:UBER) ranks third on our list of the best tech stocks to buy according to Brad Gerstner. The stock accounts for nearly 16% of Altimeter Capital’s 13F portfolio.
Uber (NYSE:UBER) grew its gross bookings by 21% year-over-year and reported a 15% increase in customers. In the second quarter, the company expects a further 20% growth in gross bookings. Innovation is crucial to the success of Uber. Last year the company partnered with Waymo, to bring autonomous driving technology to UBER. Waymo provides autonomous vehicles to Uber for ride-hailing services. The company now offers autonomous deliveries in Phoenix, Arizona, Fairfax, Virginia, Miami, Los Angeles, Mountain View, California, and Tokyo in Japan. Uber Technologies, Inc. (NYSE:UBER) is also operating a pilot project in Phoenix, Arizona, and Las Vegas, for autonomous ride-hailing services.
While Uber’s (NYSE:UBER) management thinks autonomous vehicle (AV) technology holds promise, they believe the transition would be rather gradual and human drivers will co-exist with autonomous vehicles for a long time. However, as the technology matures and better models are built, AV fleet owners or individual car owners can achieve better returns on their investments by integrating their vehicles into Uber’s ecosystem, which offers a strong brand and established demand base. Uber stands to uniquely benefit from the growth of AV technology as it has worked to establish pricing, matching, routing algorithms, and payment systems, and these systems can increase the utility of autonomous vehicles in the ride-hailing industry.
At the close of Q1 2024, 130 hedge funds were bullish on Uber Technologies, Inc. (NYSE:UBER), with total stakes amounting to $10.18 billion. Wall Street analysts hold a consensus buy opinion on Uber. The stock grew by 20% year-to-date. Based on price targets from 52 analysts, the stock has a median price forecast of $88, representing an upside of 25% from its current price of $70.34.
Overall UBER ranks 3rd 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 UBER 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 UBER 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.