3 Billionaire Stocks to Buy Now

When we look at the top bets of some of the most prominent billionaire investors, there is a common theme that stands out. These professionals favor highly profitable companies that dominate their industry. Most importantly, they invest in stocks that trade at reasonable valuations relative to future growth expectations.

Stephen Mandel of Lone Pine Capital, Chase Coleman of Tiger Global Management and Andreas Halvorsen of Viking Global Investors have had successful investment careers with their net worth ranging from $2.5 billion to $7 billion, according to Forbes. Let’s look at these firms’ top holdings at the end of the second quarter and why investors should expect exceptional returns from these stocks over the next few years.

1. Taiwan Semiconductor Manufacturing

Lone Pine Capital manages more than $16 billion in assets. The biggest holding at the end of the second quarter was the chip maker Taiwan Semiconductor Manufacturing (TSM 1.51%)also known as TSMC.

TSMC is a widely held technology stock among the most successful investment firms. The company enjoys a profitable position as the world’s top chip foundry. Produces chips for Nvidia, Advanced microdevices, Inteland a number of other semiconductor companies and hold over 60% of the global foundry market.

TSMC gives investors broad exposure to the trends driving growth in the semiconductor industry without the added risk of picking winners and losers between the Nvidias and Intels of the world.

TSMC’s strengths in manufacturing advanced chips position it well for growth as companies invest in powerful chips to handle the demanding workloads of artificial intelligence (AI) training. Demand for high-performance chips drove 32% year-over-year revenue growth last quarter and should continue that momentum through 2025.

Management expects strong near-term results driven by rising demand for smartphone and AI chips. Strong top-line growth should help earnings, as TSMC generates a high operating margin of 45% relative to revenue. That will fund the company’s plan to spend at least $30 billion this year in capital expenditures to support long-term demand for advanced chip technologies.

Wall Street analysts expect the company’s earnings to grow at an annual rate of 26% over the next few years. Given that the stock will continue to trade at its current forward price-to-earnings (P/E) ratio of 26, investors could earn a return on par with those estimates.

2. Meta Platforms

Meta platforms (META 0.60%) there are an estimated 3.2 billion people using its family of apps every day. This is a strong advantage in the digital advertising market, which is how the company makes money.

Chase Coleman’s Tiger Global Management has held a large stake in the social media leader since 2018 and held $3.7 billion worth of shares in the second quarter, making it the company’s largest holding.

Meta AI is already having a big impact on the user experience in Facebook and Instagram. The company’s AI models have improved the quality of recommendations, which can have a big impact on time spent on these platforms. As a result, impressions and cost per ad increased 10% year-over-year, driving a strong 22% increase in revenue over the year-ago quarter.

The strong revenue growth will give Meta more profit to reinvest in advanced AI models and thus maintain the positive growth cycle. “We had a strong quarter, and Meta AI is on track to become the world’s most used AI assistant by the end of the year,” said CEO Mark Zuckerberg.

Meta is a very profitable business. It generated a profit of $51 billion on revenue of $149 billion in the past four quarters. Management plans to spend between $37 billion and $40 billion on capital expenditures this year, with significant growth expected in 2025. This spending will support AI research and other products for long-term growth.

Wall Street analysts expect Meta to post 17% annual earnings growth over the next few years. Assuming the stock continues to trade at the same P/E, that’s enough growth for the stock to double in value over the next five years.

3. Amazon

Amazon (AMZN 3.71%) is a strong brand in the e-commerce and enterprise space with its Amazon Web Services (AWS) cloud computing business. It generates most of its $604 billion in revenue over the past 12 months from retail-related services, including advertising, but about two-thirds of its operating profit comes from cloud services.

Viking Global Investors held $1.8 billion worth of Amazon stock in the second quarter, making it the company’s largest holding and significantly increasing its stake in the quarter.

“We continue to make progress on a number of dimensions, but perhaps none more so than the continued reacceleration of AWS growth,” CEO Andy Jassy said in the second quarter earnings report. Amazon benefits from companies migrating their on-premise data systems to the cloud, and a big driver for this migration in 2024 is to take advantage of AI services.

AWS revenue grew 19% year-over-year, and Amazon should see that momentum continue. Amazon provides tools to help customers build their own AI applications with Amazon Bedrock, in addition to its proprietary AI chips like Trainium to provide more cost-effective computing power for AI training.

Amazon’s growing AI capabilities position it well in a cloud market expected to reach $774 billion, according to Statista. Wall Street analysts expect the company’s earnings to grow at an annualized rate of 23%. Investors should expect the stock to command a premium P/E multiple and reach new highs in the coming years.