When considering investment opportunities, many turn to the choices of billionaires. It is believed that those who have ascended to the ranks of billionaires have a knack for smart investing.
While following billionaire investment patterns can provide useful insights, it’s essential to remember that billionaires might have different objectives, potentially focusing on short-term gains rather than long-term wealth accumulation sought by the average investor. Therefore, it’s crucial for individual investors to conduct thorough due diligence to ensure a stock aligns with their investment goals.
Exploring Amazon – A Steady Player in AI
Undoubtedly, Amazon (NASDAQ: AMZN) is a household name across various investor strata. Known for its dominance in online retail and cloud services, Amazon has garnered favor among consumers and investors with its diverse revenue streams.
Amidst modest growth in online sales, Amazon’s profits surged by an impressive 141% in the first half of 2024, fueled by robust performances in subscription sales, third-party services, and advertising. The sustained growth in cloud computing and AI through its AWS division continues to anchor Amazon’s profitability.
Despite a conservative 11% increase in net sales, Amazon’s 45 P/E ratio, significantly lower than its five-year average of 87, attracted billionaire investors like Ken Griffin, Ray Dalio, and Paul Tudor Jones in the second quarter of 2024.
Invesco QQQ Trust – A Collective Standpoint
The Invesco QQQ Trust (NASDAQ: QQQ), an ETF encompassing the top 100 nonfinancial stocks on the Nasdaq-100 index, draws interest from investors across the spectrum. With Apple holding nearly 9% of the fund and tech stocks dominating the top 10 positions, the ETF has delivered commendable returns.
Boasting a 37% one-year return, closely mirroring the S&P 500’s performance, the Invesco QQQ Trust has outperformed with a remarkable 436% return over the past decade. As a result, billionaires like Cliff Asness and Steven Cohen increased their stakes in Q2, appreciating the safety and growth potential offered by the ETF.
Super Micro Computer – A Roller Coaster Ride
Super Micro Computer (NASDAQ: SMCI) emerged from obscurity with a surge in demand for servers arising from a collaboration with Nvidia. However, the past year witnessed significant stock volatility, with shares reaching heights only to face selling pressure following a negative report from Hindenburg Research and a delayed 10-K filing announcement.
Billionaire investor Israel Englander’s Millennium Management acquired Super Micro shares in Q2, capitalizing on the stock’s 24 P/E ratio and analysts’ forecast of 51% profit growth in fiscal 2025. Despite the looming accounting concerns highlighted by the short-seller report, risk-tolerant investors may find potential in Super Micro.
Emulating Billionaire Investment Strategies
Billionaires often make sound investment choices, underscoring the potential value in following their lead. While not infallible, billionaires’ investment decisions can offer valuable insights for individual investors, who must conduct their due diligence to assess a stock’s suitability for their portfolio.
Would Investing in Amazon be Lucrative?
Prior to delving into Amazon’s stock, it’s essential to consider the insights provided by the Motley Fool Stock Advisor analysts. While Amazon might not be part of their top 10 stock recommendations, historical examples like Nvidia’s inclusion in the list yielding monumental returns can offer a perspective on long-term investment benefits.
Stock Advisor’s comprehensive guidance and record of significantly outperforming the S&P 500 since 2002 indicate the potential for remarkable returns by aligning one’s portfolio with their recommendations.