In this piece, we will take a look at the 16 most profitable tech stocks to invest in. If you want to skip our overview of the technology industry, then you can jump ahead to the 5 Most Profitable Tech Stocks To Invest In.
If there's one thing that can be said with certainty it's that technology runs the stock market - both figuratively and literally. Stock trading in 2024 is vastly different from trading in 1924, and at the heart of this shift is the computer. Similarly, back then, the U.S. economy was primarily dominated by industrial firms, meaning that movements in their share prices could end up setting the mood for broader indexes such as the Dow Jones Industrial Average (DJIA).
Now, not only do computers run the stock markets, but firms that either make their hardware or software reign supreme in market capitalization as well. The biggest stocks in U.S. markets, and therefore in the world, are technology companies. Some of the most prolific ones due to their trillion dollar valuations are Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT). The two account for a sizeable chunk of U.S. personal computing use, and this also underscores their valuations with investors being well aware of this role.
So naturally, 2023 has been the year of technology stocks, and the trend has so far persisted in 2024. This surge in technology stock prices comes after 2022, which was one of the worst years for the industry. In 2022, the semiconductor supply chain was at the start of a major glut, as manufacturers built up inventory based on models that had anticipated demand similar to levels seen during the coronavirus pandemic. These difficulties were exacerbated by high interest rates - which do not bode well for high growth stocks such as technology - and high inflation, which not only stresses corporate budgets but also makes it difficult for consumers to splurge for pricey gadgets such as Apple's 'spatial computing' device, the $3499 Apple Vision Pro.
Yet, as the Vision Pro shows, technology stocks have to potential to continually surprise investors, media, and the public. With the first quarter of the new year now ending, analysts and investors are pouring over the latest products from NVIDIA Corporation (NASDAQ:NVDA) - Wall Street's artificial intelligence darling. NVIDIA recently held its GTC Developers conference, an annual event, where it revealed its latest Blackwell GPU for AI. This GPU promises to reduce operating costs and energy usage by up to 25 times when compared to predecessors.
NVIDIA's chief Jensen Huang also provided details about Blackwell's design and costs in an interview with CNBC where he shared:
Yes, a mathematician, right? Yeah, yeah, really terrific mathematician. And this computer here will replace thousands of general-purpose computers. This is the part that's incredible. In fact, what's amazing is that the cables of connecting last generation general purpose computers, the cables of connecting them, cost more than the price of one of these computers. The amount of energy that we save is incredible. Megawatts and megawatts and megawatts. Because of this, we made it possible for the computer to write software by itself. It is so insanely fast. Now the software can write. The computer can write its own software. And we call that artificial intelligence.
Jensen also highlighted earlier in the talk with CNBC's Jim Cramer that a Blackwell chip can cost as much as $40,000 and that the research and development of the first generation of chips stood at a whopping $10 billion. NVIDIA is currently valued at $2.28 trillion, making the multi billion dollar spend a drop in its massive market capitalization. The shares have gained 248% over the past year, outpacing the S&P 500 Information Technology index's 53% gain over the past year by a wide margin.
So, with the dynamics of the global technology industry shifting, we decided to take a look at the top tech stocks in terms of net profit that hedge funds are buying. A couple of notable picks are Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Alphabet Inc. (NASDAQ:GOOGL).
16 Most Profitable Tech Stocks To Invest In
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Our Methodology
To make our list of the most profitable tech stocks to invest in, we ranked all technology companies by their trailing twelve month net income and picked the top stocks.
For these most profitable tech stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
16 Most Profitable Tech Stocks To Invest In
16. International Business Machines Corporation (NYSE:IBM)
Number of Q4 2023 Hedge Fund Shareholders: 50
Latest Trailing 12 Month Net Income: $7.5 billion
International Business Machines Corporation (NYSE:IBM) is one of the biggest enterprise computing companies in the world. Following Wall Street's A.I. rally, its shares have been quietly on the rise and have appreciated by 19.5% year to date. This leaves them within highs last reached in 2013.
As of Q4 2023 end, 50 out of the 933 hedge funds surveyed by Insider Monkey had bought a stake in International Business Machines Corporation (NYSE:IBM). Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital was the firm's biggest investor due to its $528 million stake.
International Business Machines Corporation (NYSE:IBM) joins Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOGL). in our list of the most profitable stocks that hedge funds have bought.
QUALCOMM Incorporated (NASDAQ:QCOM) is one of the biggest semiconductor designers in the world when it comes to smartphone processors and GPUs. The firm added to the AI hype in March 2024 when it revealed its Snapdragon 7+ Gen 3 processor for on device smartphone AI use.
During December 2023, 78 out of the 933 hedge funds covered by Insider Monkey had held a stake in the firm. QUALCOMM Incorporated (NASDAQ:QCOM)'s largest hedge fund shareholder is Josh Overdeck and David Siegel's Two Sigma Advisors as it holds $431 million worth of shares.
Latest Trailing 12 Month Net Income: $8.48 billion
ASML Holding N.V. (NASDAQ:ASML) is the backbone of the global chip manufacturing company whose machines are indispensable when it comes to making high end chips. Naturally, the shares are rated Strong Buy on average, and the average share price target is $997.95.
For their fourth quarter of 2023 shareholdings, 62 out of the 933 hedge funds profiled by Insider Monkey had bought and owned ASML Holding N.V. (NASDAQ:ASML)'s shares. Jean-Marie Eveillard's First Eagle Investment Management owned the biggest stake which was worth $1.9 billion.
Latest Trailing 12 Month Net Income: $10.6 billion
Oracle Corporation (NYSE:ORCL) is one of the biggest enterprise computing companies in the world. The firm made a notable AI announcement in March 2024 when it shared that it had partnered with NVIDIA to deliver sovereign AI all over the world.
By the end of 2023's final quarter, 100 out of the 933 hedge funds covered by Insider Monkey's research had invested in the firm. Oracle Corporation (NYSE:ORCL)'s largest hedge fund investor is Jean-Marie Eveillard's First Eagle Investment Management due to its $1.9 billion investment.
Latest Trailing 12 Month Net Income: $11.6 billion
Broadcom Inc. (NASDAQ:AVGO) is a semiconductor designer that focuses on connectivity products. Its investors were in for some good news in March 2024 when TD Cowen upgraded the shares to Outperform from Market Perform and raised the share price target to $1,500 from $1,400.
Insider Monkey dug through 933 hedge fund portfolios for their December quarter of 2023 shareholdings and discovered 91 Broadcom Inc. (NASDAQ:AVGO) stakeholders. Ken Fisher's Fisher Asset Management owned the biggest stake which was worth $2.3 billion.
Latest Trailing 12 Month Net Income: $13.4 billion
Cisco Systems, Inc. (NASDAQ:CSCO) is a global networking equipment manufacturer headquartered in San Jose, California. The shares are rated Buy on average, and the average analyst share price target is $53.47.
As of Q4 2023 end, 60 out of the 933 hedge funds covered by Insider Monkey's research had piled into the connectivity stock. Cisco Systems, Inc. (NASDAQ:CSCO)'s largest hedge fund investor is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital as it owns 22.6 million shares that are worth $1.1 billion.
Latest Trailing 12 Month Net Income: $13.75 billion
Alibaba Group Holding Limited (NYSE:BABA) is a Chinese eCommerce and technology giant headquartered in Hangzhou, China. Amidst a troubled Chinese economy that has seen widespread pain, Alibaba Group Holding Limited (NYSE:BABA) appeared to be focusing on its core businesses in March 2024 when it cut stakes in an electric vehicle company.
During December 2023, 116 among the 933 hedge funds part of Insider Monkey's database had bought Alibaba Group Holding Limited (NYSE:BABA)'s shares. David Tepper's Appaloosa Management LP was the biggest investor through its $337 million investment.
Latest Trailing 12 Month Net Income: $14.9 billion
Tesla, Inc. (NASDAQ:TSLA) is one of the more interesting companies on the stock market due to its reliance on key technologies used in car fabrication and data analytics. Its early mover advantage in the electric vehicle industry has provided Tesla, Inc. (NASDAQ:TSLA) with a chance to build a sizeable presence and collect data for assisted driving technologies. The firm's investors continued to deal with uncertainty in March 2024, particularly after a Chinese rival reduced its delivery forecasts for the year.
For their final quarter of 2023 investments, 82 out of the 933 hedge funds profiled by Insider Monkey were the firm's shareholders. Tesla, Inc. (NASDAQ:TSLA)'s largest hedge fund stakeholder is Philippe Laffont's Coatue Management as it holds a $1 billion stake.
8. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Q4 2023 Hedge Fund Shareholders: 105
Latest Trailing 12 Month Net Income: $26.27 billion
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world's largest contract chip manufacturer whose products power a sizeable chunk of the global high performance computing and smartphone industries. TSMC's importance in the global semiconductor industry was evident from the fact that NVIDIA CEO Jensen Huang called the firm one of NVIDIA's closest partners earlier this month at the NVIDIA GTC.
After digging through 933 hedge fund portfolios for their December quarter of 2023 shareholdings, Insider Monkey found that 105 had bought and owned Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)'s shares. Ken Fisher's Fisher Asset Management was the largest shareholder, owning 31 million shares that are worth $3.2 billion.
7. Tencent Holdings Limited (OTC:TCEHY)
Number of Q4 2023 Hedge Fund Shareholders: N/A
Latest Trailing 12 Month Net Income: $26.81 billion
Tencent Holdings Limited (OTC:TCEHY) is one of the biggest and diversified technology companies in the world with a sizeable presence in key areas such as financial technology and artificial intelligence. Its latest financial results provided a crucial set of figures that saw Tencent Holdings Limited (OTC:TCEHY) struggle to meet revenue growth expectations. This underscored a weakness in the Chinese economy, but the firm's CEO shared that a strong development pipeline can help Tencent Holdings Limited (OTC:TCEHY) in the future.
Latest Trailing 12 Month Net Income: $29.7 billion
NVIDIA Corporation (NASDAQ:NVDA) is the hottest stock in the technology sector right now due to its AI chips. However, the average share price target of $891.78 which comes courtesy of 46 analyst estimates is slightly lower than the trading price. NVIDIA Corporation (NASDAQ:NVDA)'s shares are nevertheless rated Strong Buy on average, as Wall Street remains optimistic of the secular shift to artificial intelligence in the data science industry.
174 out of the 933 hedge funds surveyed by Insider Monkey during Q4 2023 were NVIDIA Corporation (NASDAQ:NVDA)'s investors. Out of these, Rajiv Jain's GQG Partners was the biggest investor as it owned a $6.8 billion stake.
Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), Apple Inc. (NASDAQ:AAPL), and Alphabet Inc. (NASDAQ:GOOGL) are some highly profitable tech stocks that hedge funds are buying.
