Following the stock picks of billionaire investors can help you find long-term, rewarding investments. These investors typically do in-depth research on companies that are not available to a retail investor.
Chase Coleman of Tiger Global Management and Daniel Loeb of Third Point are two billionaire fund managers with a long track record of growing their wealth safely. Here are two of their top stocks to buy now.
1. Chase Coleman, Tiger Global Management: Nvidia
Chase Coleman founded Tiger Global Management in 2001 and today has an estimated net worth of over $5 billion, according to Forbes. Tiger Global has an impressive record of delivering market-beating returns for clients over the past two decades, and one of its largest positions in the first quarter was Nvidia (NASDAQ: NVDA) — one of the best-performing S&P 500 stocks in recent months.
Companies are buying as many graphics processing units (GPUs) as they can get their hands on to train artificial intelligence (AI) models. Meta platforms plans to have 350,000 of Nvidia’s H100 chips in its computing infrastructure by the end of the year. These powerful chips are in short supply due to high demand, and Nvidia expects this situation to continue.
The central processing units (CPUs) that have powered data centers for years are being replaced by more powerful GPUs, creating unprecedented growth for Nvidia’s data center business. Nvidia has a long history of delivering above-average growth and returns to shareholders, but its current growth is unprecedented, with revenue up 262% year-over-year in the most recent quarter.
The company won’t see its revenue triple every year, but investors who can patiently hold onto the stock over the next few years should see satisfying returns. Nvidia will continue to innovate with new products and AI solutions to fuel long-term growth.
Earlier this year, Nvidia announced its new Blackwell compute platform, which enables leading cloud service providers to take computing to the next level. The company expects demand for Blackwell and its new H200 data center GPU to outpace supply in the short term.
Nvidia expects second-quarter revenue to be around $28 billion, up 107% year-over-year. This level of demand makes the stock a no-brainer investment.
2. Daniel Loeb, Third Point: Taiwanese Semiconductor Manufacturing
Daniel Loeb is the founder of Third Point and has an estimated net worth of over $3 billion, according to Forbes. With the growing demand for AI chips, it’s no surprise that there’s another top chip company in a billionaire’s portfolio. Third Point had a significant stake in the leading chipmaker Taiwanese semiconductor production (NYSE:TSM) at the end of the first quarter.
Taiwan Semiconductor dominates the industry with over 60% of the global foundry market by 2023. As a foundry, it makes semiconductor products for other companies. All the leading chip companies, including Nvidia, have relationships with TSMC, which puts it in a strong competitive position.
TSMC’s revenue grew 12.5% year-on-year in US dollars in the first quarter, driven primarily by demand for high-performance chips. But growth should accelerate in the near term as some of the company’s end markets continue to recover, including smartphones, which account for 38% of TSMC’s business.
Management expects second-quarter revenue to be between $19.6 billion and $20.4 billion, up 27% year-over-year from the midpoint of guidance. TSMC is expanding its U.S. production capacity, reflecting a favorable outlook for chip demand.
TSMC has a long history of delivering excellent returns to shareholders, and its profitable business model has fueled growing dividends to shareholders since 2004. It’s a relatively safe stock to ride the wave of AI chip demand over the next decade.
Should You Invest $1,000 in Nvidia Now?
Before you buy Nvidia stock, here are some things to consider:
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Randi Zuckerberg, former chief market development officer and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Ballard has positions in Meta Platforms and Nvidia. The Motley Fool has positions in and recommends Meta Platforms, Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
2 No-Brainer Stocks From Billionaires You Need to Buy Right Now was originally published by The Motley Fool
