Following the stock picks of billionaires can help any investor become more informed about the markets and what stocks might be worth closer consideration. Billionaire investors tend to focus on relatively safe companies that can grow and preserve wealth, and they can afford to conduct thorough research into the companies they invest in. They have shown a propensity for avoiding companies that have peaked and/or are losing their competitive edge.
Billionaires Andreas Halvorsen of Viking Global Investors and Daniel Loeb of Third Point currently hold large stakes in two tech stocks that are among the 30 components of the Dow Jones Industrial Average. Halvorsen has had a very successful career as a professional investment manager. His net worth is estimated at $7 billion, according to Forbes. Loeb has an estimated net worth of $3 billion, according to the same source.
Viking Global bought more shares of Amazon (NASDAQ: AMZN) in the second quarter, while Third Point started a position in Apple (NASDAQ: AAPL). Here’s why these two Dow stocks getting added billionaire attention are smart buys right now.
1. Amazon
Coincidentally, Amazon is the largest holding for both Viking Global and Third Point. Despite the stock’s sharp rebound since bottoming out in 2022, Viking Global bought more shares in the second quarter, suggesting the stock still offers attractive potential.
Amazon saw accelerating growth in its market-leading cloud computing business this year. Management is also working to improve margins on the retail side. Operating profit grew 91% year over year last quarter. The growing profits provide more resources to pursue opportunities to strengthen its e-commerce business, its largest revenue source.
Amazon is currently laying the groundwork to launch a satellite internet service, a market expected to grow 13% per year through 2030, according to Grand View Research. The company’s new broadband service, Project Kuiper, is going after up to 500 million households that don’t have broadband connectivity. It could be Amazon’s next multibillion-dollar revenue stream.
These investments are ultimately widening the company’s economic moat by creating a stickier service for customers to find what they need. It explains why the stock is the top holding for these billionaires, and why Amazon should be worth a lot more in 10 years than it is today.
2. Apple
One of Third Point’s new positions in the second quarter was Apple. Like Amazon, it benefits from a strong brand name. The smartphone market is very competitive, but the iPhone still brought in trailing-12-month revenue of $198 billion, roughly half of Apple’s business.
Brand Finance ranked the company as the top brand in the world in its annual Global Top 500 2024 report. Apple has been very successful in recent years at building a sticky ecosystem of apps and services that work together across the company’s devices, which is why customers tend to pay a premium for its products.
Apple controls only less than 20% of global smartphone unit sales, so it has a lot of opportunity to convert more users over the long term. Management continues to invest in opening more retail stores (it just opened its first location in Malaysia).
Its active installed base of devices grew to new highs in every geographic segment last quarter, which suggests there is still great potential for the brand worldwide.
The launch of new artificial intelligence (AI) features will go a long way to stimulating more demand for iPhone upgrades over the next few years. An increasing installed base should lead to more profitable growth that fuels returns for Apple investors.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Apple. The Motley Fool has a disclosure policy.
2 Dow Jones Stocks Billionaires Are Buying was originally published by The Motley Fool
