In this piece, we will take a look at Goldman Sachs' top 15 stock picks for 2024. If you want to skip our introduction to the investment bank and the latest saga surrounding its business, then take a look at Goldman Sachs' Top 15 Stock Picks for 2024.
The Goldman Sachs Group, Inc. (NYSE:GS) is one of the biggest investment banks in the world. It is also one of the oldest banks around since the institution traces its roots back to the 19th century in 1839. While Goldman Sachs' operations have stood the test of time and the bank is still managing money for clients nearly two centuries after its founding, these days, the bank has landed itself into quite a bit of turmoil.
This is because the bank's plans to target consumer banking turned out to be rather disastrous, forcing Goldman to take multi-million dollar hits to its income statement. The bank's first quarter of 2023 earnings report revealed that it had taken a massive $470 million loss to its loan portfolio as part of an effort to reorganize the retail banking division. The first quarter was particularly hard for Goldman and the banking industry as a whole as several bank collapsed in the U.S. creating worries about the stability of the entire system.
Goldman's second quarter results weren't impressive either as it reported $10.9 billion in revenue and $3.08 in earnings per share, beating and missing analyst estimates for the two segments, respectively. While the first quarter earnings were marred by the consumer banking loan impairments, Q2 was marked by an equally stunning $504 million impairment for the bank's GreenSky buy now, pay later service and $485 million of write downs in real estate. This made it unsurprising that Goldman missed analyst EPS estimates. At the same time, its profit tanked by a painful 60% annually, to touch a three year low. Yet, during the earnings call, Goldman's embattled chief executive officer Mr. David Solomon was in fire control mode as he stressed that momentum in the investment banking business was picking up. During Q2, Goldman's investment banking fees fell to $1.43 billion to miss analyst estimates of $1.49 billion.
Unfortunately for Goldman Sachs, the double digit percentage drops during the second quarter wouldn't be its last. The bank's financials for the third quarter saw its profit drop by 33% annually to sit at $2.1 billion for earnings per share of $5.47. This allowed Goldman Sachs to beat analyst EPS estimates during Q3 by a hairline of five cents. The quarterly profit results showed the scale of its troubles since it completed two consecutive years of quarters of annual profit drops. For Goldman, the earnings troubles came at a particularly painful time for the U.S. banking industry which was (and still is) dealing with historically high interest rates and slowing economic output. The bank joined its peers to cut jobs in June 2023, when its chief operating officer shared that a fresh bout of layoffs would cut 250 jobs and build over the thousands more that it had laid off in January.
So, what are Goldman Sachs' views about the future? Well, here's what its management had to say during its third quarter of 2023 earnings call:
Most recently, we announced the sale of GreenSky. We also announced the sale of Personal Financial Management this summer. We sold substantially all of our markets loan portfolio. We have reduced our historical principal investments by $9 billion this year. We are confident that the work we’re doing now provides us a stronger platform for 2024 and beyond. As we assess the operating backdrop, the US economy has proven to be more resilient than expected, though there are reasons to remain vigilant. Treasury rates have risen sharply over the past few months with 10-year yields up 75 basis points in the third quarter. On top of that, recent inflation and employment data has come in above estimates, driving market expectations of higher for longer interest rates.
So, with the future still uncertain, what are Goldman Sachs' top stock picks for 2024? We took a look at the bank's latest portfolio and found that its top three picks are Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and NVIDIA Corporation (NASDAQ:NVDA).
To compile our list of Goldman Sachs' top stock picks for 2024, we scanned through the bank's filings with the SEC and picked out its 15 biggest investment positions.
NRG Energy, Inc. (NYSE:NRG) is an American electricity provider with operations all over the country. The firm has fared poorly on the financial front as of late since it has missed analyst EPS estimates in all four of its latest quarters.
By June 2023 end, 39 out of the 910 hedge funds profiled by Insider Monkey had invested in the company. NRG Energy, Inc. (NYSE:NRG)'s largest shareholder in Q3 was Paul Singer's Elliott Management since it owned 10.3 million shares that were worth $399 million.
Along with Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and NVIDIA Corporation (NASDAQ:NVDA), NRG Energy, Inc. (NYSE:NRG) is a top Goldman Sachs stock pick for 2024.
Eli Lilly and Company (NYSE:LLY) is an American pharmaceutical giant headquartered in Indianapolis, Indiana. These days, the firm is moving full steam ahead with its portfolio of weight loss drugs. On this front, it secured approval from the FDA for another weight loss drug in November 2023.
During Q2 2023, 87 out of the 910 hedge funds part of Insider Monkey's database had held a stake in Eli Lilly and Company (NYSE:LLY). Ken Fisher's Fisher Asset Management owned the biggest stake in the firm in Q3, which was worth $2.3 billion.
Berkshire Hathaway Inc. (NYSE:BRK-A) is an investment holding company led by Warren Buffett and Charlie Munger. Its third quarter SEC filings created quite a bit of a stir as not only did the firm sell billions of dollars of shares, but it also sought confidential treatment for one purchase that's left everyone wondering.
By the end of this year's June quarter, 109 out of the 910 hedge funds tracked by Insider Monkey had bought Berkshire Hathaway Inc. (NYSE:BRK-B)'s shares. In the subsequent quarter, Michael Larson's Bill & Melinda Gates Foundation Trust was the largest hedge fund shareholder due to its $7.8 billion investment.
JPMorgan Chase & Co. (NYSE:JPM) is the biggest private bank in the world in terms of assets. A high rate environment and solid execution have helped it on the financial front since the bank has beaten analyst EPS estimates in all four of its latest quarters.
As of June 2023 end, 106 out of the 910 hedge funds polled by Insider Monkey had held a stake in the bank. JPMorgan Chase & Co. (NYSE:JPM)'s biggest investor in Q3 was Ken Fisher's Fisher Asset Management as it owned 11.3 million shares that are worth $1.6 billion.
UnitedHealth Group Incorporated (NYSE:UNH) is an American healthcare coverage provider. One of the biggest companies of its kind, the firm is a favorite Wall Street healthcare stock as its average share rating is average and the price target is $594.
Insider Monkey dug through 910 hedge funds for their second quarter of 2023 investments and found that 111 had bought and owned UnitedHealth Group Incorporated (NYSE:UNH)'s shares. Rajiv Jain's GQG Partners was the largest stakeholder in Q3 courtesy of its $1.6 billion stake.
DexCom, Inc. (NASDAQ:DXCM) is an American medical devices company that sells products to people with diabetes. It's another top rated stock on our list since analysts have set an average share rating of Strong Buy and penned in a $19 share price upside through an average share price target of $124.
As of June 2023 end, 58 out of the 910 hedge funds surveyed by Insider Monkey had held a stake in the firm. DexCom, Inc. (NASDAQ:DXCM)'s biggest hedge fund investor in the subsequent quarter was Israel Englander's Millennium Management as due to its $259 million stake.
Meta Platforms, Inc. (NASDAQ:META) is a social media company that operates WhatsApp, Instagram, and Facebook. The firm is busy beefing up its AI portfolio these days, as it announced a new suite of AI based video editing tools in November 2023.
225 out of the 910 hedge funds tracked by Insider Monkey had invested in Meta Platforms, Inc. (NASDAQ:META) during Q2 2023. During Q3, Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital owned the largest stake among hedge funds which was worth $3.4 billion.
Alphabet Inc. (NASDAQ:GOOG) is the second big tech stock on our list. Its heft and scale haven't stopped analysts from being optimistic, as they have rated the shares as Strong Buy on average and set an average share price target of $146.
Insider Monkey scoured through 910 hedge funds for their June quarter of 2023 shareholdings to find 152 Alphabet Inc. (NASDAQ:GOOG) shareholders. In Q3, the firm's biggest stakeholder in our database was Ken Fisher's Fisher Asset Management as it owned 43.7 million shares that are worth $5.7 billion.
Akamai Technologies, Inc. (NASDAQ:AKAM) is a cloud computing company that provides security, analytics, and other services. The firm has done well financially during today's era of AI and enterprise computing, having beaten analyst EPS estimates in all four of its latest quarters.
By the end of this year's second quarter, 29 out of the 910 hedge funds polled by Insider Monkey had bought the firm's shares. Akamai Technologies, Inc. (NASDAQ:AKAM)'s largest shareholder in 2023's September quarter was Ken Fisher's Fisher Asset Management due to its $5.7 billion investment.
Tesla, Inc. (NASDAQ:TSLA) is the biggest electric vehicle manufacturer in the world. The firm scored a win in November 2023, when a court ruled in its favor in a lawsuit that alleged it had monopolized markets for repairs and refurbishment.
As of June 2023 end, 79 out of the 910 hedge funds profiled by Insider Monkey had invested in Tesla, Inc. (NASDAQ:TSLA). Catherine D. Wood's ARK Investment Management was the firm's largest hedge fund investor in Q3 as it owned $1 billion worth of shares.
Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and NVIDIA Corporation (NASDAQ:NVDA) are some stocks that Goldman Sachs is piling into.
