When billionaires invest, it is more than a financial move. It is an endorsement that resonates globally. These deep-pocketed investors pioneer trends rather than follow them, armed with deep research and insider insights. That’s why tracking their moves is a favorite strategy for retail investors.
Mega-cap tech titans like Alphabet Inc. (GOOGL), Amazon.com, Inc. (AMZN), and Microsoft Corporation (MSFT), all of which hit record highs this month, are some of the top stocks that Wall Street’s favorite billionaires have in common. With stellar histories and boundless innovation, it’s easy to see why these stocks are prime choices for financial elites. For investors aiming to emulate the billionaire playbook, here’s a closer look.
Stock #1: Alphabet
Founded in 1998, Mountain View, California-based Alphabet Inc. (GOOGL), Google's parent company, is a tech giant with a global footprint. It boasts a staggering $2.3 trillion market cap, powered by flagship products like Google Search, YouTube, and Android. Embracing artificial intelligence (AI) since 2016, Alphabet now pioneers innovations in the niche with Google AI and DeepMind, transforming how we live and work in this digital era. This blend of cutting-edge AI and iconic products cements Alphabet's position as a global tech leader.
Alphabet hit a new intraday high of $191.75 on July 10, extending a string of new record peaks. GOOGL stock has gained a whopping 48.7% over the past 52 weeks, outpacing the S&P 500 Index’s ($SPX) 25% returns over the same time frame.
Alphabet also made a significant announcement after the close on April 25, revealing its inaugural quarterly dividend of $0.20 per share. That translates to a forward yield of 0.42% at current levels.
In terms of valuation, GOOGL stock trades at 24.39 times forward earnings, which is lower than its own five-year average of 25.69x.
Along with its dividend news on April 25, Alphabet announced its Q1 earnings results, which surpassed Wall Street’s projections. Revenue surged 15.4% annually to $80.5 billion, while EPS rose 61.5% year over year to $1.89, topping forecasts by 26.9%. Along with news of a new $70 billion stock buyback, this stellar quarterly performance sent shares of Alphabet soaring 10.2% in the subsequent trading session.
The company is expected to unveil its Q2 earnings results after the market closes on Tuesday, July 23. Analysts tracking Alphabet expect its EPS for the quarter to surge 27.8% year over year to $1.84.
Over the longer term, fiscal 2024 EPS is anticipated to climb 31.2% annually to $7.61 and rise by another 13.1% to $8.61 in fiscal 2025.
Billionaires Bet on Alphabet
In the high-stakes world of investing, billionaire investor Daniel Sundheim, the "LeBron James of investing," raised his stake in Alphabet by over 20% in fiscal Q1. His hedge fund, D1 Capital Partners, snapped up an additional 414,014 shares, bringing the total to 2.37 million shares, making GOOGL the fifth largest holding, at 5.5%, of D1's portfolio.
Meanwhile, George Soros, the 93-year-old legendary investor, has a bold investment strategy rooted in chaos theory and reflexivity. Since 2017, Soros Fund Management has backed Alphabet, recently boosting its stake by acquiring 271,549 shares in Q1, now totaling 1.5 million shares. This move elevates Alphabet’s portfolio weight to 3.7%, underscoring the billionaire’s belief in tech disruption.
Pershing Square’s Bill Ackman also bets on GOOGL, with 9.4 million Class C shares and 4.4 million Class A shares in his highly curated portfolio. Alphabet’s dominance in internet search and expansion into high-growth sectors like Google Cloud, combined with robust revenue growth and strategic moves like its inaugural dividend, make it a favorite among top hedge fund managers like Ackman.
GOOGL has a consensus “Strong Buy” rating overall. Of the 44 analysts covering it, 34 recommend “Strong Buy,” three suggest “Moderate Buy,” and seven say “Hold.”
The average analyst price target for Alphabet is $198.34, indicating a potential upside of 6.3%. The Street-high target price of $225 implies a 20.6% upside potential.
Stock #2: Amazon
Commanding a $2 trillion market cap, Washington-based Amazon.com, Inc. (AMZN), founded in 1994, has evolved into a global e-commerce and tech titan. Renowned for retail dominance, its ventures into entertainment with Prime Video, Amazon Music, Prime Gaming, and Twitch showcase its versatility. Amazon Web Services (AWS) leads in enterprise cloud software and AI, cementing Amazon's influence across diverse sectors.
The tech giant’s stock has been on a relentless rally. Shares of Amazon have rallied 43% over the past 52 weeks, including a 26.8% rise on a YTD basis, exceeding the broader SPX’s returns over both periods. In fact, Amazon hit a fresh all-time high last week on July 8, climbing to $201.20.
Priced at 41.35 times forward earnings, the stock trades at a discount to its own five-year average of 182.49x.
On April 30, Amazon reported its Q1 earnings results, which smashed Wall Street’s projections. While total net sales jumped 12.5% annually to $143.3 billion, its adjusted EPS of $1.13 blew past forecasts by 36.1%. The tech giant’s AWS segment delivered a 17.3% sales boost.
Amazon’s hefty free cash flow, which hit $50.1 billion during Q1, fuels its AI ventures and acquisitions. With $54 billion in cash, cash equivalents, and restricted cash, Amazon's balance sheet remains rock-solid, ready for more strategic growth.
For fiscal Q2, management anticipates net sales between $144 billion and $149 billion, marking an annual growth rate of 7% to 11%. Operating income is projected to be between $10 billion and $14 billion.
The company is expected to report its Q2 earnings results on Thursday, August 1. Analysts tracking Amazon expect its EPS for the quarter to increase 61.9% year over year to $1.02.
Over the longer term, fiscal 2024 profit is projected to reach $4.72 per share, up 66.2% year over year, and rise another 22.9% to $5.80 per share in fiscal 2025.
Billionaire Ken Griffin Bets on Amazon
Amazon founder Jeff Bezos isn't the only billionaire holding Amazon shares. Philippe Laffont, the billionaire in charge of Coatue Management, has been holding AMZN since 2009, and raised his stake by 2.5% in Q1. Laffont now owns over 10 million Amazon shares, and at 7.1% of his portfolio, it’s his second-largest holding.
Billionaire Ken Griffin, CEO of Citadel Advisors, added 352,453 AMZN shares to his own holdings in Q1. The 5.66% increase raised his stake to 6.58 million shares total. Griffin’s history with Amazon dates back to Q2 2013.
AMZN stock has a consensus “Strong Buy” rating overall. Out of the 46 analysts offering recommendations for the stock, 42 suggest a “Strong Buy,” three advise a “Moderate Buy,” and the remaining one gives a “Hold” rating.
The average analyst price target of $222.86 suggests that the stock has a 15.6% upside potential from current price levels. The Street-high price target of $246 indicates that the stock could rally as much as 27.6%.
Stock #3: Microsoft
Headquartered in Redmond, Washington, Microsoft Corporation (MSFT) reigns as a technology titan, boasting a market cap of a whopping $3.4 trillion. From dominating PC software to leading with Azure's cloud solutions, Microsoft is a force in operating systems and productivity tools.
Shares of Microsoft have rallied 31.5% over the past 52 weeks and 20.7% on a YTD basis. Similar to its fellow tech titans Amazon and Alphabet, Microsoft hit a new record high earlier this month, peaking at $468.35 on July 5.
Microsoft continues to impress with its commitment to rewarding shareholders. In fiscal Q3, it returned about $8.4 billion through share repurchases and dividends. Boasting 19 consecutive years of dividend growth, the tech giant announced a quarterly dividend of $0.75 per share, payable on Sept. 12. This brings its annualized dividend to $3.00 per share, yielding 0.65%.
In terms of valuation, the stock is trading at 34.50 times forward earnings, higher than some of its industry peers. However, the tech titan is also projected for above-average earnings growth.
On April 25, Microsoft reported its fiscal Q3 earnings results, which exceeded Wall Street’s estimates on both the top and bottom lines. While total revenue surged 17% annually to $61.9 billion, Microsoft’s EPS grew 20% to $2.94.
Microsoft's cloud revenue soared 23% to $35.1 billion, with server products and cloud services revenue up 24%, driven by skyrocketing demand for Azure and other offerings.
During the Q3 earnings call, management said it projects a 2-point boost in 2024 operating margins, with capital expenditures for fiscal 2025 anticipated to exceed those of fiscal 2024. This projection reflects Microsoft’s commitment to scaling operations to meet rising demand for cloud and AI products.
The company is expected to report its Q4 earnings results on Tuesday, July 23. Analysts tracking MSFT expect its profit per share for the quarter to increase 7.8% year over year to $2.90.
Fiscal 2024 profit is expected to be $11.77 per share, up 20% year over year, and rise another 12% to $13.18 per share in fiscal 2025.
Billionaire Stephen Mandel’s Bet on Microsoft
Billionaire investor Stephen Mandel bet big on Microsoft in Q1, building a position he has held since 2013. His Greenwich-based Lone Pine Capital hedge fund upped its MSFT stake by 6.5%, which now totals 1.9 million shares worth $812 million. MSFT, Lone Pine’s third-largest holding, now represents over 6% of its portfolio.
Elsewhere, David Tepper of Appaloosa Management notably trimmed his stakes in all three of these tech giants during Q1 - GOOGL, AMZN, and MSFT - but they still rank among the top six holdings in his fund, even as the billionaire is starting to eye Oracle (ORCL) over the rest.
Microsoft stock has a consensus “Strong Buy” rating overall. Out of the 38 analysts covering the stock, 34 suggest a “Strong Buy,” three advise a “Moderate Buy” rating, and the remaining one analyst recommends a “Hold.”
The average analyst price target of $494.43 indicates a potential upside of 8.9% from the current price levels. However, the Street-high price target of $600 suggests that the stock could rally as much as 32.1%.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
