It probably won't surprise you to learn that some of the Magnificent Seven stocks are among the most common holdings among billionaire hedge fund managers. Nvidia (NVDA +1.13%) and Alphabet (GOOGL +0.25%)(GOOG +0.31%) are extremely common holdings, as are several of the other mega-cap tech stocks.
However, it can be more interesting to see what tech stocks billionaires think could be the next big things. Here are three tech stocks, owned by some of the most prominent hedge funds in the United States, that could have massive growth potential in the years ahead.
A metaverse play with massive potential
Roblox (RBLX 6.10%) is a major holding of Ken Griffin's Citadel hedge fund, which owns nearly $400 million of stock in the gaming platform provider. And while the progress of the metaverse gaming platform has certainly been impressive, it could still be in the earlier stages of growth.
NYSE: RBLX
Key Data Points
At the end of 2023, Roblox had 71.5 million daily active users (DAUs) on its platform, 22% more than a year earlier. Management believes it could scale this to 1 billion DAUs over time, especially as wearable technology evolves and Roblox builds its presence in high-population international markets. The global metaverse market is expected to grow from $90 billion in 2023 to nearly $1 billion by 2030, and Roblox could be one of the biggest winners.
Roblox is doing a great job of improving the efficiency of its business and expects to achieve positive free cash flow in 2024, and to expand margins by 100-300 basis points per year through at least 2027. Plus, management is doing a great job of finding new ways to monetize the platform, such as immersive advertising.
One of the biggest growth areas in the tech sector
Renaissance Technology – the hedge find led by Jim Simons – has a $450 million stake in cybersecurity platform CrowdStrike (CRWD +0.46%). And while AI has been the center of attention so far in 2024, cybersecurity remains a massive and long-tailed opportunity.
CrowdStrike is a leader in cloud-based cybersecurity and was an early AI leader, using the technology to develop the best threat-detection capabilities on the market. And as the company grows, its capabilities get even stronger. After all, the company uses crowdsourced data (hence the name) to learn about and find security issues.
CrowdStrike generates over $3.4 billion in annual recurring revenue today, but this could be just a starting point. Management sees a $100 billion addressable market opportunity for the business, but with the rapid growth and evolution of the cybersecurity industry, it believes that within the next few years, the market will grow to $225 billion in size and that CrowdStrike can achieve $10 billion in ARR by the end of this decade.
A high-potential social media platform
Social media platform Pinterest (PINS 1.50%) is the largest technology stock owned by Paul Singer's Elliott Management, and by a wide margin.
NYSE: PINS
Key Data Points
Pinterest's business has been performing quite well recently, rebounding nicely from a growth slowdown after the pandemic-era surge subsided. The user base reached 498 million at the end of 2023, 11% more than a year prior, and the company was far more profitable with 86% year-over-year adjusted EBITDA growth in the fourth quarter.
There are several promising growth avenues. CEO Bill Ready is relatively new in the role and has made some exciting moves to boost Pinterest's e-commerce potential. And it's also worth noting that while Pinterest makes the bulk of its money from North American users, international users actually make up about 80% of the total and have tons of monetization potential in the years ahead.
Three high-potential businesses
To be sure, I'd never suggest investing in a particular stock just because a certain billionaire or hedge fund does. But these are three excellent businesses that have large addressable market opportunities, excellent leadership, and strong momentum, and they could be worth a closer look for your portfolio right now.
