Billionaire Investors Double Down on Two Notable Stocks Presently
Looking to unearth promising growth stocks? Consider checking out what the sharpest investors in the game are buying. Billionaires are all about safeguarding and expanding their wealth, and they've got the resources to dig deep in companies that might be out of reach for the everyday investor.
Let me share two recent billionaire picks that could be worth considering for 2025 and beyond.
1. Lam Research (LRCX)
Artificial intelligence (AI) is revolutionizing business operations and driving significant growth in the semiconductor industry. The complex computing chips required for AI research will only become more sophisticated over time. That's where Lam Research comes in - investing in this trend can be a goldmine for enthusiastic investors.
Bigwigs in the investment world, such as David Tepper of Appaloosa Management and Chase Coleman of Tiger Global Management, were buying shares during the last quarter. Why?
Major advancements are underway in how advanced processors are designed, driving robust demand for Lam's equipment and services used in chip design and manufacturing. The semiconductor industry is rebounding strongly from a cyclical slump, with Lam reporting a 16% year-over-year revenue increase in the latest quarter.
Over the past ten years, Lam has demonstrated incredible growth in both revenue and earnings per share, with a compound annual growth rate of 12% and 23%, respectively. Last year, the company generated $4.3 billion in earnings on revenues of $16.2 billion.
Lam's remarkable return on capital employed of 35% in 2021 points to a competitive advantage. It enjoys close relationships with leading chipmakers like Taiwan Semiconductor Manufacturing and Micron Technology. In fact, Micron, a leading memory chip supplier for the data center market, plans to increase capital spending by an impressive 67% this year. This can only bolster Lam's performance.
The company is poised to benefit from higher demand for AI chips, which account for $200 billion in wafer fabrication equipment investments over the next five years. It also stands to gain from growing investment in graphics processing units (GPUs) and high-bandwidth memory.
All these factors may be enticing Tepper and Coleman to snap up shares in Lam, as analysts forecast the company's earnings to grow at a sizzling annualized rate of 15% over the next few years.
2. Uber Technologies (UBER)
The convenience-driven shift towards ride-hailing services has significantly boosted Uber Technologies. This trend is here to stay, and new services like delivery and autonomous driving may contribute to further gains for investors. During the last quarter, Tepper was among those buying shares, while Coleman has already built a small position in the stock.
Uber reported extraordinary growth in monthly active users, trips, bookings, and revenue in the last quarter. Revenue surged 20% year-over-year, underpinned by soaring demand for rides and delivery services.
What's more impressive is Uber's impressive profitability! The company reported an astounding net income of $9.8 billion last year, translating to a 22% profit margin. The growing volume of trips handled by Uber provides a solid foundation for strong earnings growth.
Analysts expect Uber's earnings to continue growing at a staggering annualized rate of 34%. Autonomous ride-hailing services present both challenges and opportunities for Uber. On the one hand, competitors such as Tesla with its robotaxis in Austin are emerging. On the other, Uber itself is collaborating with Alphabet's Waymo to launch autonomous rides in Austin, Texas, in March.
However, balanced perspectives are essential. The ride-hailing market is predicted to be worth an eye-popping $11 trillion by 2030, which may well be spacious enough for multiple services. Tesla will certainly make its mark, but Uber's well-established position and powerful partnerships with Waymo and China's Baidu suggest it holds a significant edge.
In conclusion, Uber is playing a crucial role in the digital transformation of transportation, an enormous and influential sector of the global economy. With strong growth prospects and a reasonable price-to-earnings ratio, Tepper and Coleman potentially see a compelling investment opportunity with Uber.
- David Tepper and Chase Coleman, known for their expertise in finance, have demonstrated an interest in investing in Lam Research (LRCX), a company that is playing a significant role in the semiconductor industry's growth due to advancements in processor design and AI research.
- Looking ahead to 2025, the strong revenue and earnings growth of Lam Research, coupled with its close relationships with leading chipmakers, has prompted overestimation in the company's potential earnings growth by some analysts, which might attract more investors like Tepper and Coleman.
- In the realm of finance and technology, Tepper and Coleman have shown interest in Uber Technologies, a company that has significantly benefited from the shift towards convenience-driven ride-hailing services and delivery.
- With impressive profitability, soaring demand for rides and delivery services, and strong earnings growth expectations, Uber Technologies' digital transformation of transportation presents a potential investment opportunity that attracts billionaires like Tepper and Coleman who are always on the lookout for promising growth stocks.
