Sunday, 31 December 2023
by Earn Media
In investing, there are no points for originality. You can do all your homework and buy the stocks you think have the greatest chance of delivering outsize returns, or you can make it easy on yourself by following the lead of wealthier investors.
These days, it’s relatively straightforward to follow the stock moves of billionaire investors and hedge fund managers if you’re interested in taking your cues from them. If that’s you, keep reading to see two stocks that top investors are adding to their portfolios that look like great buys.
Meta Platforms (NASDAQ: META) has been one of the biggest success stories of the year. The Facebook parent nearly tripled as its “Year of Efficiency” efforts paid off. The company went through four rounds of layoffs and saw its core business performance significantly improve as monetization at its Reels product rose, and advertising demand rebounded after a slump in 2022.
The company also capitalized on the emerging AI boom, launching new products like its LLaMa large language model and AI assistants with celebrity voices and likenesses.
Billionaire investors have taken note of the company’s turnaround because it has followed many of the cost-cutting suggestions made by its top holders. In the third quarter, among the Meta stock buyers was David Tepper’s Appaloosa Management, which purchased 447,500 shares, making the stock Appaloosa’s top holding.
Tepper is known for his contrarian investing approach. For example, he bought distressed bank debt during the great financial crisis, betting that the government would backstop it.
More recently, Appaloosa has gone long on big tech stocks, with Microsoft, Amazon, Nvidia, and Alphabet rounding out its top five.
Looking to 2024, Meta seems poised for more gains. Its profitability should continue to ramp up and the digital advertising market should rebound, especially as the Federal Reserve is expected to lower interest rates, which will encourage more business spending.
One of the few stocks to outperform Meta Platforms this year was Nvidia (NASDAQ: NVDA), the semiconductor company that has established itself as the clear leader in AI chips.
The company invented the graphics processing units (GPUs) and specially designed components like its H100 accelerators, which are in such high demand that there’s currently a shortage of them.
While other chipmakers like Advanced Micro Devices and Intel are coming out with their own accelerators for training AI models and similar purposes, Nvidia still has a substantial head start in the category. And its recent results show that the surge of interest in its products is clearly paying off on the bottom line.
In the third quarter, revenue jumped 206% to $18.12 billion, and its net income, according to generally accepted accounting principles (GAAP), soared more than 1,200% to $9.24 billion, giving the company a profit margin of more than 50%.
Among the big-name investors recently buying up shares of Nvidia is Ken Griffin of Citadel, which was the best-performing hedge fund of 2022, returning $16 billion, even as equities and bond prices crashed. According to some measurements, Citadel is the best-performing hedge fund of all time.
In the third quarter, Citadel purchased 738,327 shares of Nvidia, bringing its total holding to 2,053,872 million shares, or 0.19% of its massive portfolio.
Nvidia could easily keep rallying into 2024, given its blowout growth in 2023, the surge in demand for AI chips, demand outstripping supply, and relatively little competition from other chipmakers. With the AI boom likely to accelerate in 2024, the company looks well positioned to be a winner next year.
Should you invest $1,000 in Nvidia right now?
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon and Meta Platforms. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.